Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

LINCOLN CITY COUNCIL BILL

Read the Third time, and passed.

Oral Answers to Questions — TRANSPORT

Dial-a-Ride (London)

Mr. Dykes: asked the Secretary of State for Transport if he will hold further discussions with London Regional Transport and the organisers of dial-a-ride in Greater London to ensure its continuance in operation if the Greater London council funding is terminated at the end of 1985–86.

The Minister of State, Department of Transport (Mrs. Lynda Chalker): My officials are discussing the future of the dial-a-ride system with officers of the London boroughs and London Regional Transport. I intend to find satisfactory arrangements for the continuation of the scheme.

Mr. Dykes: I thank my hon. Friend for the assurances that she gave yet again in an important speech at the beginning of last week. Will she elaborate a little, as

reassurance that this vital and developing service will continue is needed? Will she spell out, even if only in a preliminary way, how funding will continue after 1985–86?

Mrs. Chalker: I am willing to have discussions with my hon. Friend, but it would not be fair to the London Boroughs Association or to London Regional Transport to go into too much detail, as they have not come to any overall agreement. I have told them that the scheme is important and much valued, that I intend to ensure that it continues and that it is made as efficient as possible so that we get good occupancy and reduce the cost per trip. I cannot tell my hon. Friend more than that at the moment.

Mr. Corbyn: Will the hon. Lady take this opportunity to assure the House that users of dial-a-ride schemes throughout London will be able to continue to use those schemes and that there will be no cost to existing borough councils in London greater than those which they already pay towards dial-a-ride schemes? Will she ensure that the disabled of London are not forced to pay for her proposals for taking control of London Transport from the people of London?

Mrs. Chalker: This has nothing to do with the transfer of London Transport to London Regional Transport. As the hon. Gentleman knows, the costs of dial-a-ride schemes are borne wholly by ratepayers. I see no reason for that to change, but we have to find the best way in which to do it. I assure the disabled people who use dial-a-ride schemes that the reason for working so hard to find the best, most efficient and cost-effective scheme is that they should be able to go on using them.

Mr. Malins: Does my hon. Friend agree that the Greater London council's recent press release on the future of the dial-a-ride service has brought a great deal of unnecessary worry and distress to disabled and elderly people?

Mrs. Chalker: I regret to say that, once again, by spreading scare stories, the GLC has again worried many disabled people. [Interruption.] I am happy to say, however, that, despite the mutterings of the hon. Member


for West Bromwich, East (Mr. Snape), the scheme will continue. We want to find the best and most cost-effective way in which to run it.

Mrs. Dunwoody: Is the Minister aware that, sure as we are that her intentions are good, we need more assurances than the suggestions that, somehow or other, the scheme will continue? Where is the money to come from? Is she aware that for this Government cost-effective is another way of saying fewer journeys, more people left in their own homes, and greater problems for the disabled?

Mrs. Chalker: For the umpteenth time, the hon. Lady has got it wrong. The Birmingham dial-a-ride schemes have come down to an average cost of £2 per trip, but certain London schemes vary between £10 and £16 per trip. It is surely my duty, if we are to extend such services to a greater range of disabled people, to reduce the costs.

M1 Motorway (Repairs)

Mr. Madel: asked the Secretary of State for Transport if he will make a statement on the arrangements his Department has made for monitoring traffic on the M1 south of Bedfordshire from 2 to 16 July while extensive repairs are being done to the M1.

Mrs. Chalker: The arrangements for monitoring traffic include a considerably increased number of police patrols, video cameras positioned in the contraflow system and aerial surveillance during daylight hours. Everything practicable is being and will be done to keep traffic moving smoothly and safely.

Mr. Madel: As we do not want traffic in south Bedfordshire to come to a complete standstill between 2 and 16 July, will my hon. Friend assure me that there will be a sustained publicity campaign in the midlands, the north and Scotland, to try to persuade drivers to avoid that section of the M1 while repairs are done unless they have business in the south Bedfordshire area?

Mrs. Chalker: I assure my hon. Friend that every possible aspect of the national campaign has been and is being followed up. I have spent my time this morning in the M1 area, and the traffic was flowing freely. However, that will continue to happen only if those who normally use their cars on the M1 use the trains, as I have advised, during the repair period and the car parking that has been provided for them at Milton Keynes station, Birmingham international, Leagrave, Luton and St. Albans.

Mrs. Kellett-Bowman: May I congratulate my hon. Friend on the good precautions that she has taken to avoid chaos on the M1? Never before have such tremendous efforts been made in advance, and those who use the M1, such as myself, are very grateful to her.

Mrs. Chalker: I am grateful to my hon. Friend for what she said. Provided that the advice that has been given out in the leaflet, through broadcasts, question sessions and so on is followed, I believe that we can keep the remaining traffic, which should be the heavy goods vehicles, on the M1. The other traffic can stay at home or use the railways or planes. The schemes that have been developed over many months are there to help the traveller while the essential work is done.

Mr. Snape: Does the Minister accept that the unprecedented closure of the M1 is due to the enormous

increase in road freight over the past decade —[Interruption.] Whether or not that amuses the Secretary of State, it happens to be true, although he would not know, given his present job. In their policies, the Government appear to be determined to increase heavy road freight still further. Will the Minister give the House a guarantee that she will continue to resist Common Market pressure for 44-tonne lorries, before all our motorways have to be closed? Will the hon. Lady confirm that the only advice that she can offer regular travellers on the M1 is, as she said, to take the train or stay at home?

Mrs. Chalker: There is absolutely no question of 44-tonne lorries being acceptable in this country. I hope that the hon. Gentleman will help everybody else for once by getting it right in future. We are not closing the M1. The northbound traffic will go up the southbound carriageway, which has a narrow two-lane contraflow upon it. The M10 traffic will come on, go off round a roundabout and come straight back on after junction 8 where the 200-yard stretch is being renewed. The freight traffic on that stretch of the M1 is about a quarter of all traffic. The growth in the number of cars is even more than that of freight.

Mr. Roger King: Is my hon. Friend aware that I have been a user of the M for more years than I care to remember? Would there not have been a reduction in the use of the motorway during August, when large numbers of the population are away on holiday? Has the right forthnight been selected for these difficult roadworks?

Mrs. Chalker: My hon. Friend is not quite right about the volume of traffic during the holiday season. It increases on that stretch of motorway, which is why we are seeking to do the work before the children's summer holidays start. We have chosen the best combination of long daylight hours, the drier weather, which we hope we shall see during the first fortnight of July, and the higher night ambient temperatures. It is not possible to have the best of each of those, but the best combination of all three makes it the right fortnight to get that essential work done.

Bridges and Tunnels (Tolls)

Dr. Michael Clark: asked the Secretary of State for Transport what information he has as to the total revenue raised by tolls on bridges and tunnels in each of the last five years; and if he will make a statement.

The Secretary of State for Transport (Mr. Nicholas Ridley): The gross figures for each year starting in 1979–80 were: £20·2 million, £22·3 million, £28·5 million, £34·9 million and £39·2 million, totalling £145·1 million.
The Government's policy remains that estuarial crossings should be paid for by the users through tolls rather than by taxpayers, except where there are counter-arguments on the grounds of traffic diversion or congestion. That is because of the exceptional savings in time and money which these expensive facilities make possible.

Dr. Clark: Does my right hon. Friend agree that the cost of financing toll bridges and tunnels places a considerable burden on local authorities, especially counties such as Essex and Kent, which must finance the Dartford tunnel? Does he agree that toll booths cause


considerable delays at bridges and tunnels? Despite the revenue, does he agree that the country overall would be better off if toll charges were abolished?

Mr. Ridley: Taking the last point first, it would make no difference to the country overall if tolls were abolished and the costs were put on to taxpayers rather than users. The costs still have to be paid, whoever pays for them. I do not think that any direct cost falls on Essex and Kent county councils, because they have a fund to administer the tunnel. In due course it is expected that that fund will be repaid, probably in the early 1990s, and the county councils will not be out of pocket as a result.
Regarding delays, when the toll plaza is complete and there are 12 toll booths in each direction, and when the road widening is completed up to the mouth of the tunnel, I do not think that there will be delays, except those caused by a lack of capacity in the tunnel. We have already announced that we are studying how best to provide extra capacity to obviate that shortage as soon as possible.

Mr. Roy Hughes: Is not this issue of toll charges on estuarial crossings becoming more farcical every day? The latest example on the Severn bridge is of thousands of pounds being extracted from disabled drivers because no one has told them that they may cross the bridge free of charge. Surely such a concession should be advertised nationally and in the local press by the Ministry of Transport.

Mr. Ridley: I am astonished by the hon. Gentleman. Until 1979 he supported the Labour Government who firmly and strongly advocated the continuation of tolls on estuarial crossings. Why does he appear to change his mind now that there is a Conservative Government? The disabled have the concession to which the hon. Gentleman referred, and I hope that he will do his best to ensure that there is a high take-up of it.

Mr. Willie W. Hamilton: Is the Secretary of State aware that Fife region is the only region in Britain that one pays both to get into and out of—on the Forth and Tay bridges? Does he not realise that the sooner we get rid of that nonsense the better?

Mr. Ridley: If the hon. Gentleman feels like that my advice to him is to stay in Fife.

Mr. Leigh: Is my right hon. Friend aware that it costs £2 to cross the Humber bridge and return home again? Is there any other county in the United Kingdom where one must pay to go from one part of it to another? Does it not make a mockery of the creation of Humberside, which artificially joins north Lincolnshire and east Yorkshire, much to the chagrin of its inhabitants?

Mr. Ridley: I hope that my hon. Friend will feel like sending a copy of that supplementary question to Mrs. Barbara Castle and, indeed, perhaps an invoice to match it.

Mr. Cartwright: If the engineering study announced last week by the Minister of State recommends in favour of an additional river crossing at Dartford, will that new tunnel be subject to the same toll arrangements as the existing Dartford tunnels?

Mr. Ridley: When a question involves two "ifs" I am entitled to say that it is hypothetical. Indeed, that is my answer to the hon. Gentleman.

Mr. Anderson: May I make a further helpful counter argument? Will the Secretary of State consider throwing a lifeline to the increasingly floundering Conservative candidate in the Brecon and Radnor by-election and, consistent with recent other gifts, end tolls on the Severn bridge?

Mr. Ridley: No, Sir. It is not Government policy to seek to buy by-election results as Mrs. Castle did with the Humber bridge. Humberside was lumbered with an enormous debt as a result of that by-election promise. We have no intention of inflicting such a cruel burden on the inhabitants of Brecon and Radnor.

Mr. John David Taylor: Is it expected that the toll revenue will pay off the cost of these bridges and tunnels? If so, will there be a time limit on the changing of tolls?

Mr. Ridley: It depends on which crossing the right hon. Gentleman means. Some are within sight of redeeming their capital debt, but others are not.

Air Services

Sir Reginald Eyre: asked the Secretary of State for Transport how many international scheduled services currently operate out of regional airports; and how many operated in 1983.

The Parliamentary Under-Secretary of State for Transport (Mr. Michael Spicer): There are about 925 individual international services per week from regional airports compared with about 690 two years ago, an increase of just over one third.

Sir Reginald Eyre: Is my hon. Friend aware that those impressive figures show the Government's commitment to regional airports? How many more routes have started from regional airports since 1983?

Mr. Spicer: About 1,500 international routes are now available from regional airports, of which 100 are in use. This year alone, 14 started from Manchester and four from Birmingham.

Mr. Kennedy: Will the Minister undertake at least to investigate the possibility of providing full customs facilities at Inverness and Wick airports so that the potential for international flights between the highlands and Scandinavia and northern Europe can be more fully exploited?

Mr. Spicer: We are always willing to investigate the possibility of additional customs facilities and I shall certainly look into the cases that the hon. Gentleman mentioned. We must, however, be sure that there is a reasonable amount of traffic to justify the cost of providing those facilities.

Sir Fergus Montgomery: Will my hon. Friend give some idea of the expected increase in international routes from regional airports? What are the prospects for Manchester airport in the light of the White Paper?

Mr. Spicer: The prospects for Manchester airport are excellent in view of its track record in the immediate past. There has been an increase from 3·5 million passengers per annum in 1979 to 6 million this year. Bristol has shown a 25 per cent. increase in the same period and international traffic from regional airports generally has risen from 7·6


million to 12 million passengers per annum over the same period. On the basis of experience, therefore, the future holds excellent prospects for regional airports.

Mr. Ron Lewis: Will the Minister give an assurance that those excellent prospects also apply to Carlisle?

Mr. Spicer: Carlisle has had its ups and downs, but it is a good airport. I think that we have now overcome the customs problems.

Mr. Patrick Thompson: Does my hon. Friend accept that there is concern in Norwich that cross-subsidy for Stansted may make fair competition difficult, if not impossible, for regional airports? Will he introduce further measures to encourage the development of regional airports and the reform of their financial structure?

Mr. Spicer: Under the new Bill, which we shall introduce as soon as possible, the accounts of the various airports in the BAA system will be transparent. Any loans between airports will have to be at fully commercial rates. Norwich is an expanding airport with tremendous possibilities, especially through the inter-regional system into northern Europe. There are good prospects there, and many new routes have started up recently.

Mr. John David Taylor: Is the Minister aware of the misleading practice by British Airways, which in its scheduled flights includes certain international flights from regional airports that go via London Heathrow? Will he confirm that the figures he has given relate to genuine international flights from regional airports exclusive of calls in London?

Mr. Spicer: It is quite true that a number of passengers travel from regional airports through the London system, because the London system is the busiest international hub in the world. Our object is to build up other hubs, notably at Manchester, and we are being very successful in that policy.

Mr. Snape: Does the Minister accept that Birmingham's excellent regional airport owes a great deal of its success to the activities of the West Midlands county council in recent years? Does he also accept that many regional airport directors feel very strongly about the Government's practice of refusing permission for foreign airlines to fly direct to the regions unless that permission is linked to the withdrawal of slots by those airlines in and out of Heathrow? Will he ensure that that practice ceases?

Mr. Spicer: Birmingham's recent record was not as bright as the records of many other regional airports. One of the reasons why its prospects are now extremely good is that central Government have given £20 million of taxpayers' money to develop Birmingham airport.

Motorway Construction

Mr. Knox: asked the Secretary of State for Transport how much has been spent on new motorway construction in each of the past three years at constant prices.

Mr. Ridley: At constant 1982–83 prices, the amount spent on new motorway construction was £285 million in 1982–83; £289 million in 1983–84; and provisionally, £295 million in 1984–85. A further £725 million was spent on construction of other national roads in the same period.

Mr. Knox: I welcome the improvement that has been made, but does my right hon. Friend feel that the new

motorway construction programme is adequate? Does he not think that we need a much better motorway network if we are to move goods and materials more quickly and improve our industrial efficiency?

Mr. Ridley: Overall spending on national roads has increased by 30 per cent. in real terms since we inherited the work from the Labour Government. That is a large and major contribution to improving the roads system. Within that total it is likely that more priority will have to be given to non-motorway roads, bypasses and smaller schemes as the motorway construction programme begins to draw towards its close.

Mr. Andrew F. Bennett: Will the right hon. Gentleman confirm that those figures contain a considerable amount for the preparation of the Denton to Portwood motorway in my constituency? Will he now announce the date for starting work on that motorway? Will he also listen with considerable sympathy to the case presented by Tameside council for the completion of the outer ring road around Manchester, which will have a considerable impact on the area's industrial development? In particular, will he press the Minister of State to be sympathetic to the case that will be presented to her when she meets a deputation from Tameside later today?

Mr. Ridley: The costs of those schemes are in the "National Roads England 1985" programme, which my hon. Friend the Minister of State announced a couple of weeks ago. I think the hon. Gentleman supports their going through the public inquiry procedure before they can commence. He will also know as well as I do that my hon. Friend is always helpful and sympathetic, as I am sure she will be when the hon. Gentleman meets her this afternoon.

Mr. Chapman: What is the current average cost per mile of building a new motorway?

Mr. Ridley: I should like to give my hon. Friend an accurate figure. Off the cuff figures may not be quite accurate, particularly as my hon. Friend did not specify whether he was referring to urban, semi-urban or rural motorways. I shall give him a full answer.

Road Traffic (Driving Instruction) Act 1984

Mr. Colvin: asked the Secretary of State for Transport when the Road Traffic (Driving Instruction) Act 1984 will be implemented.

Mrs. Chalker: Most of the provisions of the Act were introduced on 20 May 1985. Section 1 has yet to be implemented. We expect to bring this remaining provision, which relates to the identification of driving instructors, into operation later this year.

Mr. Colvin: I thank my hon. Friend for that reply. What benefits have flowed from the Act so far? What will be her reaction to the Driving Instructors Association's seven-point plan for road safety, which will not only save lives but an estimated £2,000 million?

Mrs. Chalker: Those elements of the Act already in operation are that all new trainees should be partly qualified before they are allowed to give any tuition—which will be under a minimum of one fifth, 20 per cent., supervision—that they must complete their qualifications within six months and that they will not be allowed to extend their trainee licence for a further six months.


They will have to take up special training, and there will be tighter direct personal supervision of the trainees, which is very important. The identification cards are to follow. As regards the representations made by the Driving Instructors Association, my officials have recently met the association for detailed discussion, and I am giving detailed consideration to its proposals.

Mr. Gregory: Does my hon. Friend accept that there is concern on the Conservative Benches that, as a result of implementation, there may be even more generous donations to the Liberal party by the British School of Motoring? Taking this into consideration—

Mr. Speaker: Order. That is not the Minister's responsibility.

Mr. Gregory: May I then ask my hon. Friend to urge on those driving schools that contribute to political parties that they should show that on the windscreens of their cars?

Mrs. Chalker: That must be a matter for the individual driving school. Our concern is better driving and fewer accidents. I hope that everybody's concern in driving instruction will be first and foremost to give the best possible tuition to learner drivers. If that means fewer resources for their political protegees, we might have better drivers.

Mr. Speaker: In fairness, I call Mr. Simon Hughes.

Mr. Simon Hughes: When the Minister meets the Driving Instructors Association this afternoon, will she give sympathetic consideration to extending the regulations even further so that the proposal put forward by my colleague in the other place, supported by the Government's spokesman for transport there and members of the Labour party, that instructors should be trained to teach, will soon be part of the regulations, in addition to what the hon. Lady has provided for so far?

Mrs. Chalker: Our training is training to teach, and certain comments recorded in Hansard in the other place are not quite correct. I am concerned to see that we get the best possible standard of tuition, because with that, and with better enforcement of the law through the penalty points system, we shall have better driving and fewer accidents on our roads. That is what we want to achieve. Any suggestions will always be looked at carefully in that light.

M3 Motorway (Extension)

Mr. David Atkinson: asked the Secretary of State for Transport what plans he has for a north-eastern extension of the M3 motorway.

Mrs. Chalker: I have no such plans.

Mr. Atkinson: Will my hon. Friend accept the appreciation of my constituents and all users of the M3 motorway, including myself, for the recent completion of the southern extension ahead of time? Will she also accept that the same motorists will be disappointed with her reply, because they feel that any time saved by that extension will be lost as a result of the congestion at the other end, most notably on the A4? Does my hon. Friend have any plans to speed up traffic between the Chiswick flyover and Parliament square?

Mrs. Chalker: I thank my hon. Friend for his earlier comment about the completion of the southern extension of the M3, which was urgently needed. We are purposely looking at the needs and concerns within inner London not only of road users but of those who live in the area. Until the independent assessment studies have been completed, whether it be for that or any other area, I shall not be thinking of any changes to the present network.

Mr. Corbyn: When does the Minister expect the road assessment studies to be completed and published?

Mrs. Chalker: The work being done by the consultants is going along well on the whole. They need to collect a certain amount of information which they are not being permitted to collect. Therefore, I cannot give the hon. Gentleman an answer to his question. He had better ask his friends in the GLC.

"Cycles on Trains"

Mr. Steen: asked the Secretary of State for Transport if he has any plans to meet the chairman of British Rail to discuss the results of the research paper entitled "Cycles on Trains", commissioned by British Rail; and if he will make a statement.

The Parliamentary Under-Secretary of State for Transport (Mr. David Mitchell): This is a matter for British Rail. My hon. Friend may wish to take it up with the chairman direct.

Mr. Steen: Is my hon. Friend aware that the two most favoured recommendations in the report by the Harris people are that charges for bicycles on British Rail should stop and that the ban on the inter-city rail network should cease? Is he aware that £7 million of additional income is being lost by the unhelpful attitude of British Rail? Will my hon. Friend say something about that, to ensure that British Rail gets more money from bicycle users?

Mr. Mitchell: I am aware of my hon. Friend's longstanding interest in this matter as chairman of the all-party Friends of Cycling group. I assure him that I know of no plans by British Rail to extend its restrictions. There are restrictions on HSTs because there is not enough space to take large quantities of luggage and other paraphernalia. I shall report my hon. Friend's comments to the chairman of British Rail.

Midland Main Line (Electrification)

Mr. Freeman: asked the Secretary of State for Transport when he last discussed with the chairman of British Rail plans for electrification of the Midland main line north of Bedford.

Mr. David Mitchell: The British Railways Board is responsible for planning its own investment. If the chairman wishes to raise this project at one of our regular meetings, I shall be glad to discuss it.

Mr. Freeman: When my hon. Friend next sees the chairman of British Rail, will he convey to him two simple points on behalf of my constituents in Kettering? First, they want to see the Midland main line electrified from St. Pancras through Kettering to Yorkshire—the whole line. Secondly, they want to see Kettering retain its status as an inter-city interchange station. That is important for my constituents.

Mr. Mitchell: I shall keep my hon. Friend's points in mind. British Rail has not submitted to Ministers a proposal to electrify to Kettering, and I understand that it has not come to any decision to do so. My hon. Friend will be aware that it is only three years since British Rail demonstrated its commitment to the Midland main line by introducing HSTs on the route. That has meant a 20-minute saving on the run to Sheffield and has resulted in a substantial increase in customers.
As for electrification generally, I assure my hon. Friend that British Rail is not held back on its requests. Today, I have given British Rail consent to reopen and electrify the Snow Hill tunnel in London.

Mrs. Beckett: Does the Minister accept that all those who live in communities served by the midland line support the call for electrification and hope that the Government will encourage British Rail to make such a proposal? Does he also accept that many of us would like to see British-built stock running on the line? Will he consider lifting the ban on BREL's ability to compete in tendering for locomotives so that orders do not end up being placed abroad?

Mr. Mitchell: It is not for Ministers to twist the arm of British Rail about the priority that it should give to individual investment projects. It is for management to put forward what it believes to be best to achieve the purposes and objectives that it has been set.

Mr. Higgins: Given the history of investment in the Bedford-St. Pancras line, does my hon. Friend agree that future investment must depend on reasonable productivity being obtained? If so, to what extent have the promises of improved productivity in earlier negotiations, which were the subject of much industrial dispute, been delivered by the unions concerned?

Mr. Mitchell: My right hon. Friend is right to draw attention to the importance of productivity, especially when it is part of the appraisal on which the decision to carry out the investment is based.
My right hon. Friend referred to a specific matter concerning productivity. This is a sensitive topic on which there are continuing negotiations, and I should not like to make them more difficult.

Mrs. Dunwoody: Is not the Minister dodging the basic question when he says that it is not his concern if British Rail does not go to British Rail Engineering Ltd. for its locomotives? Has he not worked out that it is a lot cheaper and more efficient to keep the BREL workshops fully occupied than to insist on open tenders from at least five foreign competitors?

Mr. Mitchell: I understand that British Rail Engineering Ltd. is involved as a sub-contractor in more than one of the potential bids for the contract about which the hon. Lady is concerned.

International Maritime Fraud

Mr. Ottaway: asked the Secretary of State for Transport what steps have been taken in support of resolution TD/B/C.4/AC.4/L.Z approved by the United Nations Conference on Trade and Development at Geneva on 6 to 17 February 1984 on combating international maritime fraud.

Mr. David Mitchell: The Government were disappointed to see that the resolution to which my hon. Friend

refers contained no practical proposals for combating maritime fraud. We hope that UNCTAD will produce more constructive ideas at its second meeting, and we shall be working hard to this end.

Mr. Ottaway: Is my hon. Friend aware of the growing concern about the level of maritime fraud, which is currently estimated by the International Maritime Bureau as running at $10 billion a year and which puts it on a par with the drugs trade? Will my hon. Friend assure the House that a high-powered delegation will be sent to the conference in Zurich in October?

Mr. Mitchell: I assure my hon. Friend that Britain will be properly represented by a high-powered delegation. We recognise the importance of the matter. I cannot put a precise figure on the cost of maritime fraud, but, in addition to the actual cost of losses, there is substantial damage to confidence within the trading communities concerned.

Oral Answers to Questions — ATTORNEY-GENERAL

Magistrates

Mr. Cohen: asked the Attorney-General what steps Her Majesty's Government take to seek to ensure that the appointment of magistrates reflects the nature of the community, particularly with reference to the appointment of working people, women and members of the ethnic minority communities.

The Solicitor-General (Sir Patrick Mayhew): The appointment of magistrates in England and Wales rests not with Her Majesty's Government but with the Lord Chancellor and the Chancellor of the County Palatine of Lancaster. The method of selection is fully described in a pamphlet issued by the Lord Chancellor, of which I am arranging to send a copy to the hon. Member. The policy of successive Lord Chancellors with regard to securing balance is set out in a speech by the present Lord Chancellor, of which I am also sending a copy to the hon. Member.

Mr. Cohen: Why is there such a great preponderance of shire county type justices of the peace, who have no empathy with or experience of urban life and the lives of the majority of the population? How can the Attorney-General justify this bias, with no effort being made to rectify it — for example, by providing child care facilities so that more housewives could do the job, by appointing those in their 40s or 50s who are long-term unemployed and have plenty of time to do a good job, or by having more ethnic minority JPs so that there would be a proper mix for all communities? Does not the procedure of secret appointments mean that JPs have no links with communities in the cities?

The Solicitor-General: The answer to the last section of the hon. Gentleman's comments is no. As for the remainder, I hope the hon. Gentleman will accept that it is the purpose of the Lord Chancellor to secure balance on the bench, reflecting all walks of life in the petty sessional area that the bench serves. To that end, the Lord Chancellor is helped by advisory committees. Greater London has five such committees. It is and has been the policy of successive Lord Chancellors to secure balance


regardless of any personal predilection that local Members of Parliament, for example, may have. Balance is essential.

Mr. Beaumont-Dark: Does my hon. and learned Friend agree that it would be damaging to the excellent system of the local judiciary if people were chosen purely on the basis of ethnic origin, whether men or women? Is it not right that those appointed should be best qualified for the job? Otherwise, confidence would be lost in the judicial system.

The Solicitor-General: There is only one criterion of overriding importance—personal suitability for the job of sitting in judgment on one's fellow men. I agree entirely with what my hon. Friend has said. That must be the overriding consideration, and beyond that there must be balance reflecting all walks of life in the area.

Mr. Nicholas Brown: The Solicitor-General will recall, I suspect, a range of questions from me to the Attorney-General about the composition of the bench in Newcastle upon Tyne and the written reply that I received on 17 January 1984, which said:
The primary requirement is that those appointed should be personally suitable in character, integrity and understanding. The Lord Chancellor also bears in mind the need for each bench to reflect the community it serves in such matters as age, sex, occupation, social background, location of residence and political opinion."—[Official Report, 17 January 1984; Vol. 52, c. 155.]
Those are fair guidelines. Therefore, can the Solicitor-General say why, in cities like Newcastle upon Tyne, where previous questioning has shown that the guidelines are being ignored, the Lord Chancellor makes no effort to ensure that his guidelines are insisted upon?

The Solicitor-General: I am reassured that there is a high degree of consistency between what I have just said about the proper test and what my right hon. and learned Friend said a few months ago. The hon. Gentleman is wrong to say that the Lord Chancellor makes no effort to ensure that those guidelines are met. He makes considerable efforts and is guided in that task by the local advisory committees.

Independent Prosecution Service

Mr. Nicholas Brown: asked the Attorney-General if he will make a statement regarding discussions with the staff commission concerning the setting up of the independent prosecution service.

The Attorney-General (Sir Michael Havers): The staff commission for the independent prosecution service will not be set up until August and therefore no discussions have yet taken place.

Mr. Brown: The House welcomes the setting up of the new prosecution service. Will the Attorney-General assure us that his discussions with the staff commission will lead to a properly remunerated service which will attract talented people and offer a good career structure?

The Attorney-General: That is certainly the Government's intention. I am grateful to the hon. Gentleman for his comments on the new service. Regular consultations about the staff commission and all aspects of the Crown prosecution service are taking place with the

Civil Service, local government trade unions, representatives of local government employers and other interested parties. We have three months in which to set up the staff commission. It will clearly be done in that time.

European Commission of Human Rights (Myra Hindley)

Mr. Greenway: asked the Attorney-General what steps Her Majesty's Government are taking to be represented at the European Commission of Human Rights in the case being brought by Myra Hindley; and if he will make a statement.

The Attorney-General: I have seen press reports that Miss Hindley is proposing to make an application to the European Commission of Human Rights. But I have no information about whether she has done so or what the nature of her complaint might be. The Commission will not admit a case for substantive consideration without first inviting the Goverment's comments. It has not done so yet in Miss Hindley's case, and the question of representation at any subsequent hearing is therefore hypothetical. If there were to be such a hearing the Government would, of course, be represented.

Mr. Greenway: Bearing in mind the unspeakably heinous nature of Miss Hindley's crime, does my right hon. and learned Friend agree that it would be unacceptable and repellent to the public if she were manipulated out of prison by some European back door because of unrepresentative pressure group action? If her behaviour has improved, would it not be right for the prison service to find her a different role in the prison? Would it not be dangerous both to Miss Hindley and to the public if she were released?

The Attorney-General: I cannot form any view on her application's prospect of success, because I have not seen it. Indeed, I do not know whether she has submitted an application. It is worth remembering her previous application in 1980 to the Commission complaining about the Home Secretary's refusal to consider her for parole. That application was rejected by the Commission as manifestly ill-founded. Under the convention, the Commission may not deal with any application that is substantially the same as one that has already been considered.

Conveyancing Services

Mr. Ottaway: asked the Attorney-General what representations he has received about the likely impact on solicitors' branch offices if banks and building societies are permitted to offer conveyancing services.

The Attorney-General: The Government have received a number of representations on this matter. Most have suggested that lending institutions would provide unfair competition to independent solicitors, and that the viability of many firms would be jeopardised as a result.

Mr. Ottaway: There is growing concern that allowing banks and building societies to carry out conveyancing will result in many solicitors' branch offices, which provide useful services to the community, having to close. How much research did the Government carry out into this proposal?

The Attorney-General: It has always been apparent that there would have to be the widest possible consultation. That point was made absolutely clear in the written answer given in February last year by my hon. and learned Friend the Solicitor-General. That consultation was carried out in the greatest possible detail. I think that my hon. Friend knows the results as well as I do.

Mr. Maclennan: Is it true that the Government have decided not to proceed with the provisions of the Administration of Justice Bill before the Coopers and Lybrand report is available?

Mr. Speaker: That relates to question No. 41.

Mr. Maclennan: I beg your pardon, Mr. Speaker.

Mr. Peter Bruinvels: Does my right hon. and learned Friend agree that banks and building societies do a great job in looking after financial deposits, that they have excellent solicitors working for them, and that they are a great credit to their professions? What is wrong with competition between the banks, building societies and solicitors?

The Attorney-General: The Government's position is clear. They have a commitment to permit organisations such as banks and building societies to provide conveyancing services and to do so in such a way that the consumer will not be prejudiced by conflicts of interest or anti-competitive practices. We shall honour that commitment.

Oral Answers to Questions — OVERSEAS DEVELOPMENT ADMINISTRATION

Bilateral Aid Programme

Mr. Barnett: asked the Secretary of State for Foreign and Commonwealth Affairs what priority his Department gives to renewable natural resources and other agriculture-related sectors in the bilateral aid programme.

The Minister for Overseas Development (Mr. Timothy Raison): I continue to attach much importance to these sectors. Within the bilateral programmes we support a substantial number of renewable natural resources and related activities. There are also activities in other economic sectors, such as transport, of which one major objective is to bring benefits to agricultural areas.

Mr. Barnett: If the Minister regards this part of the bilateral programme as so important, why has he cut it by almost £40 million, from 28 to 19 per cent.? Where has the money gone?

Mr. Raison: I do not believe that the sector has declined as a share of our bilateral aid over the past few years. I attach great importance to these sectors. It must be remembered that, in making decisions about the sectors in which money is spent, we must have regard to the requests of recipient countries as well as to our own desires.

Mr. Pavitt: Will the Minister consider the problem of the agrarian subsistence areas which he assists, within the terms of the supplementary question of my hon. Friend the Member for Greenwich (Mr. Barnett)? In view of the need to have self-help co-operatives and resource centres, will he consider reinstituting a committee of his Department which was wound up by the previous Labour Government? I refer to the Co-operative Overseas Aid Committee,

which, I am glad to say, continues to support the work of overseas students at the co-operative college at Loughborough?

Mr. Raison: I shall consider the hon. Gentleman's remarks. We continue to receive advice about co-operatives, but there are considerable difficulties about co-operative farming ventures in many parts of the world.

Viscount Cranborne: Does my right hon. Friend agree that an important factor releates to the policies that are adopted by many of the Governments in the countries that come within the programme, and that bilateral aid, despite the suggestion of the hon. Member for Greenwich (Mr. Barnett), is not the only issue? A great deal of progress would have been made if it had been possible for the Governments concerned to adopt policies to encourage agricultural development instead of encouraging a drift to the towns.

Mr. Raison: My hon. Friend is right. The House has to be reminded from time to time that we are heavily dependent on the policies that are adopted by the recipient countries. In many of them, alas, the policies of their Governments run counter to effective agricultural development.

Aid Policy (Strategic and Political Reasons)

Mr. Deakins: asked the Secretary of State for Foreign and Commonwealth Affairs how much United Kingdom aid was given for strategic and political reasons in the latest year for which figures are available.

Mr. Raison: Our fundamental objective in making aid allocations is to assist economic and social progress in developing countries; but we take account also of political and commercial considerations where appropriate. It is not possible to relate these factors to precise statistics.

Mr. Deakins: Is it not wrong for Britain's aid policy to be geared to any extent, however small as a percentage of our total aid budget, to giving aid for strategic and political reasons when aid should be going to the poorest people in the poorest countries as a matter of priority? Surely it is no aid policy to give money to repressive or military regimes scattered around the world for purposes which may coincide with the policies of the Ministry of Defence and the Foreign Office, but not with the administration of the Minister's Department.

Mr. Raison: My budget is a civil aid one, and it is not spent on the provision of military aid. There are many calls on my Department's budget, and we concentrate to a great extent on the poorer countries. I believe that we have a good record in that respect, and that is how it will continue to be.

Mr. Latham: Do Eastern bloc countries give other than strategic and political aid?

Mr. Raison: They give a bit, but, taking Ethiopia as an example, the amount of food that they have given has been minimal, exceeded by India, let alone the West.

Africa (International Fund for Agricultural Development)

Mr. Maclennan: asked the Secretary of State for Foreign and Commonwealth Affairs what recent


discussions he has had with the International Fund for Agricultural Development regarding assistance with its project in Africa.

Mr. Raison: The president of the International Fund for Agricultural Development called on me on 19 June. We agreed on the need for early agreement on the second replenishment of IFAD'S ordinary resources. Thereafter, member Governments could consider whether or not to make voluntary contributions to the IFAD special programme for Africa.

Mr. Maclennan: Has the apparent logjam that is developing over the compromise agreement that was reached earlier this year between other donors been caused by the United States Administration? Is the right hon. Gentleman using his best efforts to break that logjam?

Mr. Raison: Within the last fortnight I have had talks both with the administrator of United States aid and with Dr. Jazairy, the president of IFAD, and I have done what I can to try to resolve the disagreement. I believe that it should be possible to get a constructive result.

Mr. Key: In our aid to famine in Africa, has the airlift component been met outside, and in addition to, our overseas aid budget? When representatives of the Church of England meet the Foreign Secretary later this week, will it be suggested that it would be more helpful if they would encourage hon. Members in all parts of the House who wish to see new money found for our overseas aid projects rather than to criticise us constantly and, indeed, threaten to vote against us at the next election?

Mr. Raison: The greater part of the airlift has generously been provided by the Ministry of Defence out of its funds. I am grateful to that Ministry and to the Royal Air Force for the way in which they have carried out this operation. As for the bishops, the Church and the Synod, we should all stand firm in advising them to vote Conservative at the next election, not least because of the effectiveness of our aid policies.

Ethiopia

Mr. Chapman: asked the Secretary of State for Foreign and Commonwealth Affairs if he will report progress on the Ethiopian Government's contribution in the provision of vehicles to transport aid for the relief of the famine.

Mr. Raison: The United Nations co-ordinator in Addis Ababa, Mr. Jansson, continues to press the Ethiopian Government to provide more trucks for relief efforts. We understand that at a meeting on 17 June Colonel Mengistu told Mr. Jansson that a further 400 trucks would be made available.

Mr. Chapman: I thank my right hon. Friend for that information. Does he agree that some time ago the Ethiopian Government gave an unequivocal commitment to provide 4,000 vehicles, but so far they have provided not even one tenth of the number? Does he further agree that Her Majesty's Government owe it to the millions of people in various countries who have donated to the relief of famine in Ethiopia to make the strongest representations to the Ethiopian authorities on this issue? Will we make it clear that unless the Ethiopian authorities keep to their commitment, the relief that has been given by many countries will rot on the wharves because the food will not 

get to the people who are desperately in need of it? The result will be that more people will die, and that will be the fault of the Ethiopian Government.

Mr. Raison: It is difficult to say exactly what number of trucks has been provided by the Ethiopians at any given time. The numbers appear to fluctuate. I agree with my hon. Friend that the Ethiopians need to fulfil their promise to provide many more, and we are prepared to support any representations to that effect.

Aid Projects (Women)

Mr. Stuart Holland: asked the Secretary of State for Foreign and Commonwealth Affairs what measures he has taken to assess the benefits of British aid projects to women in recipient countries.

Mr. Raison: We take account of the role of women when designing projects. New procedures have been introduced to enable us to assess the benefits derived by women. I have seen these benefits for myself, for instance, when I visited the Orissa family welfare project in India and the Mbeya referral hospital in Tanzania. Recently we redesigned a project in Malawi to ensure that extension services reached women farmers.

Mr. Holland: Is the right hon. Gentleman aware that one or two projects hardly meet the point and that there is widespread concern that the role of women in development is not sufficiently recognised by his Department? For example, does he have an adviser on the role of women in Third-world countries? If not. will he either appoint one, a woman, or a team, to take this important factor into account in development issues?

Mr. Raison: We have a social development adviser whose role certainly includes concentration on the implications for women of the projects that we put forward. However, the essential point is that in our procedures for assessing and appraising projects, we consider the impact on women as a matter of course. I believe that that is the right way of doing it, rather than creating a separate department to deal with the matter.

Mr. Soames: Is my right hon. Friend aware that many on this side of the House take a dim view of aid going to one particular quarter? Does he agree that aid should be for everyone in a country affected by problems of this type, not uniquely for women or anyone else?

Mr. Raison: There is much good sense in what my hon. Friend says. As I have already said, women face many hardships, especially in agriculture, and it is right to consider those. However, I am against the notion that we should split the aid programme into different sectors by age, sex, class, creed or anything.

Indonesia

Mr. Tom Clarke: asked the Secretary of State for Foreign and Commonwealth Affairs what is the level of overseas aid from the United Kingdom to Indonesia.

Mr. Raison: In 1984 we spent £6·72 million on capital aid, including the aid and trade provision, and £3·81 million on technical co-operation. In addition, the Commonwealth Development Corporation invested £15·473 million.

Mr. Clarke: In view of that substantial commitment to overseas aid in Indonesia, does the Minister believe that


he should speak against blatant abuses of human rights in that country, including the execution of political prisoners, some of whom have been in prison for 12 to 15 years?

Mr. Raison: We are against abuses of human rights wherever they occur. The Government's position on this matter is well known.

European Summit (Milan)

Mr. Tony Marlow: On a point of order, Mr. Speaker. As you know, this morning I asked whether I could put down a private notice question—

Mr. Speaker: Order. Nobody knows that.

Mr. Marlow: On a different subject, Mr. Speaker—

Mr. Speaker: Order. The hon. Gentleman must not refer to such applications.

Mr. Marlow: On a different subject entirely, Mr. Speaker. As you will know, at the weekend in Milan our Prime Minister was subjected to full-frontal federalism by other European Governments. Later this evening we shall have an important debate on European matters. We are fortunate to have the Leader of the House in the Chamber with us. In view of the dramatic events of the weekend and the radical nature of some of the proposals that have been made it is essential, before proceeding with this evening's business, that the House has a report from the Prime Minister, the Leader of the House or someone else about what took place at the weekend. If not, it will be impossible for us, in the changed situation, to make the speeches that we would be able to make if we knew the true circumstances of what happened at the weekend. Will the Leader of the House say something about this?

Mr. Nicholas Budgen: rose—

Mr. Speaker: Order. Is this on the same point of order?

Mr. Budgen: Yes, Sir. I wonder whether you would ask someone from the Government to say whether the Prime Minister proposes to make a statement about what happened at Milan. We are all anxious to know the Government's attitude towards the sadly unsuccessful summit. We all know that the Dooge report was sent to be approved by the Government 10 days ago. Many of our European allies came forward with proposals based upon the Dooge report, but, to our amazement, the British Government opposed those who support the Dooge report—

Mr. Speaker: Order. The hon. Gentleman has frequently mentioned the Government. That has nothing to do with me. He must put a point of order which I can answer.

Mr. Budgen: Perhaps you would be good enough, Mr. Speaker, to cajole some response from the Government. Of course, I shall be guided by your interpretation of your powers, but sometimes our constitution works in curious ways. Although I would not suggest for a moment that you should give a nod or a wink to the Government, it might facilitate later proceedings if we knew something more about the institution for which it is suggested the House of Commons should vote money. I hesitate to say this, but some Conservative Members believe that, with a majority of 140, we should not be arrogant. I know that the Government would never wish to be arrogant and try to bounce the House into voting for something about which it does not know.

Mr. Speaker: Order. I think that is the speech that the hon. Gentleman may make in Committee.

Mr. Ron Leighton: Further to that point of order, Mr. Speaker. Perhaps you could help the House. We read in the newspapers over the weekend—we often obtain information from newspapers first—that the Prime Minister might make a statement tomorrow on her humiliation in Milan. It might be helpful if a Minister were to make a statement today about the position in the EC, before we debate whether we should give further large sums of money to subsidise this enterprise. The Government may have changed their view, and it would be helpful to the House to hear from them today before the debate on the European Communities (Finance) Bill. Is there any way in which the Government can be invited to make a statement today rather than tomorrow?

Mr. Speaker: It is not open to me to force statements from any quarter. I also saw what the hon. Gentleman read in the newspaper, but I have no knowledge whether there is to be a statement tomorrow, I have had no notification of a statement today.

Mr. Marlow: Further to the point of order, Mr. Speaker—

Mr. Speaker: Order. I do not think that any point of order can arise, because I do not know about any statement being made.

Mr. Marlow: Do you have any control whatever, Mr. Speaker, over the timing of debates, other than those under Standing Order No. 10? I am sure that you would wish the House to be properly informed of the very important EC discussions which took place at the weekend, before we proceed with this evening's debate.

Mr. Speaker: I am riot responsible for the debates that are called on any one day. I am glad to say that that is not one of my responsibilities.

Questions to Ministers

Mr. Guy Barnett: On a point of order, Mr. Speaker. I well recognise that the content of a ministerial answer is not a matter for you, but when that answer is in contradiction of a previous answer given within the past two weeks, I should have thought that it might be a matter for you.
I wish to raise with you the answer that I received to a supplementary question that I put on question 42. In my view, it was in contradiction of a reply that I had received to a written question—

Mr. Speaker: Order. We cannot indulge in the practice of continuing Question Time. The hon. Gentleman must find other methods of dealing with the matter.

Tamil Asylum Seekers

Mr. Jeremy Corbyn: Are you aware, Mr. Speaker, that on Friday the High Court found against the Home Office and directed it to reconsider the case of a Tamil asylum seeker who had been refused leave by the Home Office to remain in Britain? This is a serious matter. Has there been any intimation from the Home Office that it intends to make a statement on its view of


the High Court decision and the fate of the other Tamil asylum seekers at present living in Britain and who have some concern about their future?

Mr. Speaker: I have had no notification of a statement, but I do know that there are to be Home Office questions on Thursday.

Youth Training Scheme

The Secretary of State for Employment (Mr. Tom King): With permission, Mr. Speaker, I would like to make a statement on youth training.
My right hon. Friend the Chancellor of the Exchequer announced in his Budget statement that he was making extra resources available which could fund a two-year youth training scheme. On the same day I asked the Manpower Services Commission to consult and develop proposals for such a scheme to start from 1 April next year and to report to me in three months.
On 27 June the commission, which includes representatives fom the CBI, local authorities, education interests and the TUC, unanimously approved proposals for the two-year scheme. The chairman immediately submitted these to me and asked for the earliest possible approval.
I am pleased to inform the House that I have now approved the broad framework of these proposals and I have today authorised the commission to proceed with implementation, within the resource levels previously announced and on the planned date of 1 April.
The proposals represent a major step forward in improving the opportunities for young people both in training, and work experience. The scheme will give broad-based training in the first year, with a greater emphasis on more specific training in the second year, with the opportunity for all to obtain a vocational qualification. This will be building on the foundations laid by the current youth training scheme, which more than three quarters of a million young people have entered so far. The youth training scheme has opened new horizons for young people and employers and has brought home to many the contribution which training can make to improving employability and productivity. I pay tribute to the work of all the individuals and organisations who have played their part in the development of the one-year youth training scheme.
The main features of the new scheme will be as follows:
There will be a quality training programme leading to vocational qualifications and there will be at least 20 weeks off-the-job training over two years. In addition to a planned programme of on-the-job training and work experience. There will be two years' training for 16-year-old school leavers and one year for 17-year-old school leavers.
There will be a training agreement between the trainee and those responsible for his training setting out their respective rights and responsibilities, including the detail of each young person's training programme.
From April 1987, only approved training organisations will be able to take part, after they have satisfied criteria drawn up by the Manpower Services Commission, and a new training standards advisory service will be set up to monitor the quality of the training provided. Trainees will be paid an allowance of £27–30 per week in the first year and £35 per week in the second year.
A basic grant of £160 per month will be payable in respect of each trainee to his training provider. There will be a managing agent's fee of £110 per annum.
We recognise the special needs of some areas and some young people who may find it difficult to find employer-based training places and it is proposed that a premium payment of £110 per month per trainee will be paid in such cases to those providing alternative training.
In approving that broad framework I have approved an increase in the existing trainee allowance to £27·30 with effect from the beginning of September this year, as recommended by the commission.
Under the new scheme, up to 200,000 more young people will be in training than under the existing youth training scheme, bringing the total to over half a million in training at any one time. This will mean a major improvement in the opportunities for training and work experience for our young people and one that will become a permament and essential feature of vocational education and training provision in this country.

Mr. John Evans: Will the Secretary of State acknowledge that there is no mention of a new training inspectorate in the version of the statement that I have received, and that it is unfair to make such an announcement when the Opposition spokesman has not been notified of it?
Will the right hon. Gentleman acknowledge that the backdrop to his announcement is that there are almost 1·25 million unemployed under-25-year-olds and that about 300,000 people under the age of 25 have not had a job since leaving school, that young people have borne the brunt of the Tory Government's social security cuts — including the loss of board and lodging allowance after a few weeks in one town — and that there is a near certainty that young people are about to have the flimsy protection of the wages councils removed? In other words, young people are facing a crisis as a result of the Government's actions.
Will the Secretary of State acknowledge that, despite the Government's massive propaganda exercise, the customers of the YTS—the youngsters—do not believe that they will receive that which they most desire, which is full-time permanent employment, at the end of the scheme? Does he further acknowledge that YTS is no longer about providing a permanent bridge between school and work, to use the fine words that were used when the scheme was launched four years ago, but is more a gangway to the dole queue for about one third of the youngsters, who fail to obtain a job when they complete their scheme?
Will the Secretary of State confirm that, despite all his assurances about no job substitution, one undesirable spin-off from the YTS has been a dramatic reduction in apprenticeships, and that a one-year or even a two-year scheme is not a proper replacement for a well planned three or four-year apprenticeship scheme as organised by the engineering industry training board? The collapse of apprenticeships over the past five years has resulted in the skill shortages about which the Secretary of State now complains. Will he confirm that many employers are showing a marked reluctance to become involved in a two-year scheme unless there is a substantial increase in Government money for them.
Is the right hon. Gentleman aware that parents, trade unionists and the Labour party are not satisfied that enough effort has been put into health and safety cover for youngsters on YTS? Far too many youngsters are suffering unnecessary accidents. Will he try to improve the involvement in YTS of the Health and Safety Executive?
Does the right hon. Gentleman agree that the allowances that he has announced are a scandal and that the Labour Government paid an allowance which would be £37 a week at today's prices? That should be compared with the Government's proposed £27·30 for the first year and £35 for the second. Do the Government have any plans ever to pay young trainees a fair allowance?
Is the right hon. Gentleman aware that the Labour party would welcome a comprehensive two-year training scheme for young people which included an education allowance which allowed academically gifted youngsters from poorer homes to remain in higher education, which would guarantee employment for the vast majority of youngsters at the scheme's end? It is obvious that the nation will have to wait for a Labour Government, who will expand the economy and get the country moving again, before such a scheme can be put into operation.

Mr. King: I do not think that I am the only hon. Member who regarded that as an extraordinarily sour response to an announcement which is extremely good news for all youngsters corning out of school, as it will improve their prospects. It is especially sour as it comes from the spokesman of a party which considered introducing such a scheme and then refused to approve it and was not prepared to put forward the necessary funds. Instead, Labour introduced the youth opportunities programme, which had no training content and offered nothing like the prospects for the future that our scheme offers.
When I listen to the sour attempts of the hon. Member for St. Helens, North (Mr. Evans) and some of his colleagues to score party political points, I am much more impressed with the attitude of the TUC, which has unanimously supported these proposals. I take comfort riot from the hon. Gentleman's statement but from the comments of young people on YTS. All the evidence shows that there is increasing support for the scheme and increasing recognition of what it does. As from next year, every 16-year-old school leaver will be assured of two years of good training and work experience. Every parent should know that too. The country has never previously been able to offer that assurance, but we are determined to achieve it.

Mr. Andrew Rowe: Is my right hon. Friend aware that this development is widely welcomed? In view of the extraordinary farrago of nonsense that we have just heard from the hon. Member for St. Helens, North (Mr. Evans), it is worth observing that, when the engineering industry training board came to see some of us the other day it said that it wanted to shorten apprenticeships, not to four years, but to about two and a half years. It is nonsense for the Opposition to claim that the earlier scheme offered by that training board is better than what is now proposed.

Mr. King: I think that the hon. Member for St. Helens, North is involved in the engineering industry, and his comments about apprenticeships were those of the old world, which offered that type of training. We do not want a limited number of people attending schemes on a time-serving basis, or access for only one age group. We want to open training, if possible to all ages, but certainly to widen opportunities for young people. We want training that is based on the achievement of standards, rather than on time serving. That is the modern approach, and what the TUC supports. I am delighted to have that support.

Mr. Ron Leighton: Is the Secretary of State aware that he has a great responsibility to get this right, as many trainees already do not stay the whole of the first year, and therefore the second year must be a big improvement on the first? Many employers are


not sure that they can keep trainees interested for two years, so schemes must be improved and more must be put into them. The Government are not putting in enough money. They are trying to get the scheme on the cheap. The Government are trying to get two years for the price of one. If they are really concerned, they should be willing to put in the money.
Is the right hon. Gentleman aware that the level of allowances that he has announced is not high enough, and that part of maturing to adulthood is having one's own money and using it? Is he further aware that what we need is a proper inquiry into the funding of a proper scheme?

Mr. King: I appreciate the hon. Gentleman's more moderate and constructive approach, in relative terms. I know of his interest, as Chairman of the Select Committee, which also has taken an interest in the YTS. The hon. Gentleman will recognise that we are looking to employers for a major contribution in the launching of the new scheme. In looking at the finances required, it is not sufficient to look just at the Government's contribution. The scheme is based very much on employers, who recognise its value, making their contribution as well. The hon. Gentleman said that he was looking for improvement. I pay tribute to my predecessors who launched the scheme. It is a remarkable achievement, but we are continually looking for improvement. We shall certainly look to the second year to make a greater improvement in the quality of the scheme.

Mr. Michael Howard: Will my right hon. Friend confirm that, contrary to the assertions of the hon. Member for St. Helens, North (Mr. Evans), the scheme has in fact proved an effective route to long-term employment for young people? Can my right hon. Friend give the House the latest figures for the percentage of those who, on leaving the scheme, continue in employment or further education?

Mr. Evans: The figure is 48 per cent.

Mr. King: I am glad to have that piece of heckling from the hon. Gentleman, so that I can correct the totally erroneous figure that he has given. He quoted a figure of 48 per cent., which happens to be a small sample of a few trainees in October. In response to my hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), the overall figure for those going on to full-time jobs or going back to further education or training is about 70 per cent.

Mr. David Alton: I give the Secretary of State's announcement a qualified welcome. Will he also tell the House the number of people who are dropping out of the scheme in any given month? One figure that was suggested was 56 per cent. for one month. Will the right hon. Gentleman do anything to implement the proposals of the Manpower Services Commission for improving the quality of some of the schemes concerned? Has he repudiated entirely the suggestion made by the Secretary of State for Trade and Industry that people who are involved in these schemes might lose their supplementary benefit?

Mr. King: The position has been made absolutely clear by myself, by the Prime Minister and by everybody else concerned. We have no proposals on that matter. The hon.
Gentleman sought to discuss the number dropping out of the scheme. I hope he will recognise that a number of the so-called drop-outs go off into full-time employment and take jobs elsewhere. I do not regard that in any way as a failure. We intend the scheme to give youngsters a good start in life. Some respond more quickly than others. Some find that they can go out and get other jobs that may reward them better. I do not regard that as disappointment. We want to give all the youngsters a better start in life. In considering these matters the House should recognise the real achievement that has been made. I pay tribute to the commission and the work that it has done in putting forward the proposals. It is a challenge. It will not be easy to meet it. I am grateful for all the work that has been done by the commission and by all the staff in bringing forward the proposals.

Mr. James Couchman: Is my right hon. Friend aware that today's announcement will be much welcomed in my constituency which has high unemployment for the south-east of England and where there has been a dramatic loss of apprenticeships over recent years? Is he further aware that I have one of the excellent ITECs in my constituency? Can he offer any hope that he will extend the courses provided by these excellent colleges for youngsters who are similarly qualified to those going on YTS? Will there be any hope of a vocational qualification at the end of a possible two-year ITEC course?

Mr. King: As my hon. Friend said, ITECs have been a considerable success. Indeed, I visited two schemes—one in Glasgow and the other in Cumbernauld, which are both areas of significant unemployment. The managers reported that they were placing more than 90 per cent. of the youngsters in full-time jobs at the end of their ITEC courses. We are studying ITECs in particular, because this announcement does not cover them. Further study is being made to ensure that ITECs can continue effectively under the two-year scheme.

Mr. Andrew F. Bennett: Does the Secretary of State want to attract people from full-time education to YTS courses? Is he aware that during the past two years the number of youngsters staying on in education has declined, almost certainly because of the attractions of the YTS training allowance? Would it not be a good idea to treat those who remain in education and those who attend YTS in the same way for the purpose of allowances?

Mr. King: I notice that the hon. Gentleman and his hon. Friends are making bizarre proposals, which will be fairly expensive, if allowances are paid to those in full-time education and to those in YTS. We believe that it is right and fair to pay a training allowance. We have also made it clear that we are determined to ensure that it remains a high quality training scheme and to improve its quality. Therefore, I make no apologies if we moderate the training allowance in the interests of maintaining the quality of training on the scheme. That is overwhelmingly in the long-term interests of all youngsters on the scheme.

Mr. David Madel: As more people will be needed to train young people in this scheme, can my right hon. Friend confirm that a big effort will be made by the Manpower Services Commission and employers to recruit people from among the skilled


unemployed to help with training in the scheme, which, among other things, would reduce the level of unemployment?

Mr. King: I am grateful to my hon. Friend for his comment. Perhaps I should emphasise that to launch a two-year YTS is a major challenge. It will be a major challenge to ensure that we have the places available and the staff to man the scheme. The role of employers will be significant, but, in view of their tremendous support for the one-year training scheme, I am confident that they will recognise both the challenge and the opportunity that this expansion of training will bring.

Mr. Eric Deakins: Is not the DHSS policy on board and lodging allowances completely at odds with the policy which the Secretary of State has announced today? If young people cannot get a job locally now, unlike previously, they will not be able to get a job anywhere.

Mr. King: I do not follow the logic of that argument. We are determined to ensure both that training is available and that opportunities exist locally. I am not, therefore, sure what the hon. Gentleman's point is.

Mr. Robin Squire: I congratulate my right hon. Friend unreservedly on his announcement today. In the light of the sustained and co-ordinated Marxist-led campaign against YTS, which this afternoon has unfortunately found an echo on the Labour party Front Bench, will my right hon. Friend redouble his efforts to ensure that the picture that is accurately projected is that of the vast majority of YTS trainees, who have found employment and also enjoyed the experience?

Mr. King: I am grateful to my hon. Friend for his comment. It is a little depressing that the Labour party, which used to criticise the one-year training scheme and say that it should be a two-year training scheme, still cannot find it in its heart to make anything other than sour and grudging comments when we produce fully costed proposals, make the resources available and give the scheme the priority that it needs. I would have thought that this was one issue on which the House could have united.

Mr. Derek Foster: Will the Secretary of State admit that the numbers leaving YTS to go into work vary substantially throughout the country? In the north of England, for example, the figure can be as low as 30 per cent., and not 70 per cent. as is claimed. What will the Secretary of State do about that? What will he do in county Durham, where we cannot find sufficient employers to provide the scheme that he wishes?

Mr. King: The hon. Gentleman will notice that in my statement I referred to the way in which we shall fund schemes where there is a shortage of employer-based schemes. I recognise that the percentage of those who go into full-time employment varies up and down the country. That does not happen in the construction industry training board scheme. I saw some people from Durham and the north-east on an extremely successful course there, after which more than 90 per cent. find full time jobs. That variation does not occur with other training board schemes, either. We are determined to improve the chances of youngsters finding full-time work. The hon. Gentleman would be the first to say that YTS does that for youngsters. Those who have been on a scheme are much more likely to have the chance of a job.

Several Hon. Members: rose—

Mr. Speaker: Order. I have to bear in mind that today is an important private Members' day, but I will allow questions to continue for a further 10 minutes, making a full half hour for Back Berchers.

Mr. Tony Baldry: Will my right hon. Friend confirm that a two-year YTS has nothing to do with fiddling the figures, exploitation or any of the usual destructive criticisms made by the Opposition, and has everything to do with ensuring a constructive vocational and voluntary training scheme which will lead to high quality qualifications? Does he agree that the Treasury support of £3,800 per trainee bears interesting comparison with the £3,600 in West Germany, the only difference being that in West Germany every penny is paid by the employers? Is it not time that all employers in this country began to look on training, not as an on-cost, but as a valuable investment in their future?

Mr. King: As my hon. Friend has said, our financial commitment to the scheme is substantial. This development of the scheme certainly puts greater responsibility on employers, but I am confident that they will respond to the challenge. Everyone who has worked with the scheme recognises that, although there may be variations in the terms and arrangements, the scheme is here to stay. It is a major and fundamental improvement to the opportunities for young people in this country and we are determined to make it work.

Mr. Robert Maclennan: I wholly welcome any expansion of the youth training scheme, which cannot guarantee employment but which makes the prospect of a job much more likely. What steps is the Minister taking to ensure that in areas of high unemployment, especially the sparsely populated areas of Scotland, where employers are most hard-pressed to find places, the Government will do their utmost to ensure that the approved training organisations are not handicapped by a lack of response from employers?

Mr. King: As I have said, I have agreed with my right hon. Friend the Chancellor the amount of Government resources to be made available for the scheme, but the scheme depends on a partnership with employers and other providers of training. The record so far is good. There was the great success of ensuring that we met the guarantee that every 16-year-old leaving school and wanting a place on the scheme could be offered a place. We intend to carry that forward to try to meet the needs and aspirations of all young people in this respect.

Mr. Michael Colvin: In the recent defence debate anxiety was expressed about the difficulty of finding British crews to man ships flagged out and manned by foreign crews when requisitioned in case of hostilities. Will my right hon. Friend use his good offices to try to persuade ship owners to be more constructive and to offer more YTS places? Does he agree that a year ashore and a year at sea could begin to establish a Merchant Navy reserve which could serve this country well in times of hostilities? As this will require instructors, will my right hon. Friend consider extending job release arrangements so that men with lifelong experience and skills in industry and the armed forces taking early retirement will be available to become instructors in the youth training scheme?

Mr. King: I have consulted the greatest living authority on the youth training scheme, my hon. Friend the Minister of State, who is sitting beside me, but neither of us can answer off the cuff in relation to merchant shipping. I shall look into the matter and write to my hon. Friend.

Mr. Harry Cohen: Does the Minister agree that 4 per cent. is a miserly increase and that the original £25 allowance was too low in the first place? How can youngsters be expected to build an independent life on £27·30? Would Conservative Members expect their children to be able to do so? Is it not true that there are no real jobs for young people at the end of the scheme?

Mr. King: The hon. Gentleman's last comment was a characteristic piece of rubbish and shows that he had not been listening to the earlier exchanges. The resources that we have made available and to which we have given priority are limited. It is our responsibility to determine the balance between the funds going into the value of the training and those going into the training allowance. Given that many of these youngsters' contemporaries are still in full-time education and receiving no resources at all, the balance that we have struck does not seem unfair. In the past two years we have sought to raise the allowance a little, but I think that we have struck a fair balance and that the resources that we have made available will be widely welcomed by young people.

Mr. Gerald Malone: Does my right hon. Friend agree that it is important that the schemes concentrate on practical, technical skills? Is he aware that the Tullos training centre in my constituency, which does just that, achieved a 93 per cent. success rate in finding employment for the young people last year and hopes to better that record this year? As for providing incentives to improve take-up, could not the incentive scheme be extended to the Opposition? Perhaps more of them would then turn up to debate these matters.

Mr. King: I was most interested to hear of my hon. Friend's experience of the scheme in his area when I was there last Saturday. There is no doubt that there are now some outstanding schemes with exceptional records, going as high as 100 per cent., in placing young people in full-time jobs. The average, however, is still not as high as we should like. The challenge that we face is to bring all the schemes up to the standard of the best.

Mr. Gordon Brown: Given that the credibility of the scheme rests on the proportion of young people who go into real jobs afterwards, will the Minister stop quoting anecdotes and minor surveys and give reliable figures about how many young people actually find jobs? As the outstanding feature in West Germany is that 10 times as many young people gain recognised qualifications, will he tell us how many young people in this country will gain recognised qualifications as a result of the scheme, and how many employers will be involved?

Mr. King: I am surprised at the hon. Gentleman, as I thought that the took a reasonably close and intelligent interest in these matters. We are continuing to monitor the outcome of the scheme. Figures are published every month and they are available in the Library if the hon. Gentleman wishes to consult them. We are anxious to get the fullest possible picture. As for anecdotes, I referred to the construction training board, which had about 17,000 

trainees last year and a success rate of more than 90 per cent. in placing those youngsters in jobs. I do not regard that as an anecdote. It is a very significant sample.

Mr. Roger Gale: Does my right hon. Friend agree that the qualifications available through the YTS are likely to be of greater value than the sweat shirts, teacups and other gimmickry offered by the Labour party last week? Will he do all in his power to market the value of the qualifications, so that young people are not discouraged by the utterly negative attitude of the Labour party?

Mr. King: One of the most exciting aspects of the scheme, on which I am not yet able to advice the House further, is the work being done to integrate the qualifications available at the end of the scheme. As I said in my statement, we aim to give all young people in the scheme the opportunity to achieve a qualification. Intensive work is being done to try to integrate the qualifications with those of the City and Guilds, the Royal Society of Arts, the Business and Technician Education Council and other qualification-granting bodies, to ensure that young people achieve the first step on the ladder which can take them on to further qualifications.

Mr. Kenneth Carlisle: Is my right hon. Friend aware that in Lincolnshire 88 per cent. of those who were on the scheme in the first year have now found work or further training? He mentioned the quality of training in the second year. That is a good aim, but we must work extremely hard to achieve it. How will we make sure that the quality of that training really is up to a second year?

Mr. King: Having given my approval today to the broad framework, the detailed work will now proceed following an intensive round of discussions with all those concerned — educationists, training providers and employers — to ensure that the second year of YTS meets all our expectations.

Mr. Hugh Dykes: Will my right hon. Friend dismiss, ignore and forget the disgruntled and bitter comments of the Opposition and their supporters on the extent of the scheme, which is widely welcomed by all parts of society? Does he agree that in certain sectors, such as retail, there are still substantial anxieties about the validity, content and depth of the second year? Will he ask the MSC to have discussions with the retail industry to see what will go into the second year content?

Mr. King: I recognise that concern has been expressed about the retail sector. A colleague commented that while in this country I can be asked whether we can justify a second year of training, if I were a German Minister I would be asked why we have fewer than three years training. One of our greatest ambitions is to get a better understanding of the value of training and to make it applicable to every activity and occupation.

Mr. Evans: The Secretary of State injected into his announcement a comment about a new training inspectorate. What will the role of that body be? Can he assure us that it will be adequately funded and staffed to monitor the approved training organisations? May I make clear to the right hon. Gentleman and all of his hon. Friends that the Labour party would welcome a fully comprehensive two-year scheme to train young people, which is not what we have had today? What has been 


announced today has more to do with massaging the unemployment figures prior to the next general election than with training young people.

Mr. King: It is difficult to choose between the hon. Gentleman's first and second contributions. That attempt somehow to retrieve some of the ground achieved by his pathetically sour initial intervention was not worth the effort. The training standards advisory service will in many ways be analogous, although not at all comparable, with Her Majesty's inspectorate in the schools. In other words, it will examine and monitor the performance of the training providers to ensure that training standards are kept up to scratch. I am sure that the hon. Gentleman will support that. If the new service is to do that, we are determined to give it the resources to do a proper job.

BUSINESS OF THE HOUSE

Ordered,
That in respect of the Further Education Bill [Lords], if the Bill be committed to a Committee of the whole House, further proceedings on the Bill shall stand postponed and that as soon as the proceedings on any Money Resolution come to by the House in relation to the Bill have been concluded, this House will immediately resolve itself into a Committee on the Bill. —[Mr. Neubert]

Housing

Mr. David Winnick: I beg to move,
That this House deplores the Government's very substanial reduction in housing public expenditure which has occurred in the past five years, and which has resulted in considerable hardship and indeed misery for so many unable to be offered rented accommodation; also recognises that much essential improvement and major repair work cannot be undertaken by local authorities, or owner-occupiers on limited means because of the cuts; and calls on the Government to reverse its disastrous housing financial policies and to allow local authorities and the voluntary sector the means to build the necessary accommodation as well as allowing urgent improvement work to be carried out in both the public and private sectors.
This debate takes place against the background of an acute housing crisis. A large number of families and single people are now without adequate and secure accommodation, and many are forced to live in substandard housing and often overcrowded conditions. Homelessness is continually increasing.
In London alone, bed and breakfast accommodation is costing the boroughs £1 million a month — a sum that would be sufficient to pay off loan charges on 3,000 new council dwellings. In England and Wales, 1·25 million homes are now unfit for human habitation, and 1 million homes lack one or more basic amenities such as an inside toilet, bath or hot water. Across the country 2·5 million homes are seriously affected by damp, and 3 million homes each require immediate repairs that will cost £2,500 or more.
Between 1979–80 and 1985–86—the current financial year — there has been a 68 per cent. reduction in real terms in housing public expenditure, from £4,522 million to £1,431 million. The figures for central Government subsidies to local authority housing show that in 1980–81 —a year after this Administration came into office—the amount spent was £1,423 million. In the current financial year, it is just £400 million, a reduction of more than £1,000 million. Those figures explain why there is now a housing crisis and so much housing hardship and misery, so much of which stems from the lack of rented accommodation.
Ministers are fond of saying—we shall no doubt hear the same today—that cuts took place under the previous Labour Government. I do not deny that. There were cuts, of some of which I would not approve. It is unfortunate that the housing programe was adversely affected during the last two or three years of the previous Administration, but one should compare those cuts with the cuts made under the present Government. There can be no doubt that the present cuts go much, much deeper. Moreover, they are part of the philosophy adopted by the Government towards public sector housing.
I have accepted that there were cuts under the previous Labour Government, but it is interesting to note that in 1978 — the last full year of that Government — the number of new public sector starts was more than 107,000.

Mr. Terry Dicks: Will the hon. Gentleman give way?

Mr. Winnick: Not yet. Perhaps the hon. Gentleman will allow me to continue for a while longer, especially as a number of hon. Members wish to take part. I shall give way, but not at the moment.
The number of new council dwellings started last year was the lowest in peacetime — 39,500. However, the


estimate for the current year is that just under 32,000 new council dwellings will be started throughout the country. When one compares those figures with the 107,400 starts in the last year of the Labour Government, one can understand what I mean when I say that the housing cuts carried out by the present Government go so much deeper than anything that occurred under the Labour Administration. In addition, fewer private dwellings were started last year than in 1978.

Mr. Peter Shore: Perhaps I can reinforce and bolster my hon. Friend's already powerful argument. In the last two years of the Labour Administration, the Government persistently overprovided for housing sums that were not taken up and spent on new housing by the predominantly Conservative district and borough councils which existed then.

Mr. Winnick: I am grateful to my right hon. Friend, who had responsibility for such matters during the last Labour Government. We know of his deep concern on this issue.
Because of Government diktat, local authorities can now spend only 20 per cent. of their capital receipts whereas about two years ago the Prime Minister told us that local authorities should spend on new capital projects. She explained why it was necessary for local authorities to do more. Now not all the money that local authorities raise themselves can be spent. As a result, about £5 billion is frozen at a time when there is such a desperate shortage of adequate housing.

The Minister for Housing and Construction (Mr. Ian Gow): Does the hon. Gentleman agree that if the policy on which the Labour party fought the last election were in operation today there would be no capital receipts at all?

Mr. Winnick: I anticipated the Minister's question. Two points should be made. One, as my hon. Friends and I have asked time and again, is that if it is right for local authority tenants to buy, why is it not right for private tenants? Secondly, under a Labour Administration, there would have been, as my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) has explained, a different approach to housing from that adopted by the Minister and his colleagues.

Mr. Frank Field: My hon. Friend is aware that there are differences of opinion within the Labour party about the sale of council houses, but those of us who advocated the sale of council houses did so on the basis that new funds would be available for local authorities to spend on new projects. We were arguing that by selling, councils were forgoing the possibility of reallocating accommodation in the future for cash now, but that that cash should be spent on replacing housing stock. Is not one of the deceits of this Government that they adopted that policy and sold it on that basis, but have ratted on that commitment?

Mr. Winnick: My hon. Friend is right. The Minister would be in a stronger position, even allowing for the fact that we all know why private tenants are not allowed to buy, if he said that the Government believe, and have acted accordingly, that council tenants should be able to buy but that there is a responsibility on the Government

to make sure that that which is sold off can be replaced. However, as my hon. Friend explained, the Government have done the opposite. They have been keen to sell at a large enough discount to encourage people to buy but, far from trying to ensure that such buildings are replaced, the very opposite has been the Government's policy.
The number of people employed in the construction industry is 300,000 fewer than in 1979. That figure can be compared with the labour force survey for 1983, the last figures that are available. That shows that some 257,000 unemployed people seeking work had been employed, as their last job, in the construction industry. That figure will, I am sure, have increased in the past 18 months to two years.
When I spoke about the Conservative Government's attitude I had in mind a particular point. I had thought it proper to give the hon. Member for Hornsey and Wood Green (Sir H. Rossi) notice of this, and I believe that he was trying to come to the debate, but perhaps he has been prevented from doing so by various duties. The hon. Gentleman was, during the time of the Labour Government, the Tory spokesman on housing and construction. He gave an interview to the National Builder in which he was asked a number of questions on the basis that his party could win the May 1979 election, as it did. He is quoted as saying:
Thus, in our view, local authority activity should be directed towards helping those sections of the community that by definition cannot help themselves. The emphasis will be on sheltered housing for the elderly, special housing for the disabled and for the very poor who just cannot manage … the need is not there.
In many respects, the hon. Gentleman is to be commended, because he was as frank as one could wish. In the main, Ministers do not use such frankness. The hon. Gentleman set out what is now Conservative Ministers' philosophy—local authority dwellings are not necessary, there is no need for them except for the poorest and the elderly, and the rest can get a mortgage. In essence, that sums up Ministers' attitudes and that is why we are facing such a housing crisis.
It is a myth, and a very dangerous one, that, except for the very poor, the rest of the community can simply get a mortgage and purchase its own accommodation. Owner-occupation has grown, and I welcome that. In the 1960s, the Labour Government took certain steps that assisted people on limited means who could not otherwise obtain a mortgage to get one. We have always been in favour of encouraging people, if they so wish, to become owner-occupiers. What is far from the case is that everyone except the very poor can solve housing problems by going along to the local authority or building society and obtaining a mortgage.
For the first-time buyers, the average dwelling price in Greater London last year was £32,635. The average advance was over £26,000. In the west midlands, as one would expect, the figures are lower. The average first-time price was £18,429, but the average advance was over £16,000. To quote building society statistics, the average income of people who have borrowed for the first time in 1984 in London was nearly £13,000. In my part of the world, the west midlands, it was £8,555.
Even when one takes into consideration that there may be two incomes in the household—often, although the wife's income is taken into account, when the children come she may stop working — and even if one leaves aside, as I have no intention of doing, the level of


unemployment, particularly in the west midlands, it must be pretty obvious to Ministers, especially the Prime Minister, that a large number of people are simply not in a position to purchase. They are not earning enough to get an advance so that they can afford to purchase in London or the west midlands. They do not earn that sort of money now, and Ministers are of course saying that there should be low, or no, wage increases.
A large number of people, whom I would not describe as very poor and who manage to get by as long as they are permitted to work by the Government, have a fairish income. However, they do not have the sort of income that would qualify them for a building society mortgage. They do not have sufficient income to pay off such a mortgage over 20 or 25 years, pay rates on the property and keep it in full repair and maintenance. That is my point.
Therefore, there remains a clear need for rented accommodation. That need will not be met by the private sector. It is another myth that if one allows the private sector to revive through encouragement, it will meet demands. It will not, and there is no evidence that it will.

Mr. David Ashby: Two points need to be made. The hon. Gentleman talks about the private sector, so I shall be interested to hear what he has to say about housing associations, which cater for a real housing need in the areas about which the hon. Gentleman has talked. The other point is that, now that he has told us about people on low incomes, I should be interested to hear about those who are on high incomes but living in municipal accommodation.

Mr. Winnick: That is another one of the Tory myths. We all know about Tory propaganda about a Rolls-Royce and perhaps even a Daimler as well outside the council house, owned by people who are going on holiday four times a year to all parts of the world. Perhaps I am naive, but I had believed that at least that Tory myth was no longer in circulation. However, the hon. Gentleman has shown us that, when it comes to council houses and tenants, the Tory mind has not changed much.
The Minister boasted about shorthold tenancies, but is there any evidence that that is doing anything to satisfy housing need in London or elsewhere? Why are so many people now in bed and breakfast accommodation? Why are local authorities spending the sums that I quoted at the beginning of my remarks if shorthold tenancies are the solution? The truth is that people will invest in the private property market only to the extent that they get a rate of return that they would not get elsewhere. They have no wish to provide accommodation at the level of rents that ordinary people can afford.

Mr. Allan Roberts: Perhaps my hon. Friend will ask the hon. Member for Leicestershire, North-West (Mr. Ashby) whether he suggests that quite wealthy people who live in council housing which is now unsubsidised and from which the Sefton council makes a profit should move into owner-occupation so that they may receive large subsidies and income tax relief from the Exchequer.

Mr. Winnick: My hon. Friend has asked an interesting question to which I am sure the hon. Member for Leicestershire, North-West (Mr. Ashby) will want to respond. The hon. Gentleman made a valid point about housing associations, but they form part of the

Opposition's argument because, like local authorities, their funds have been cut so deeply that they cannot do their job.
In the borough of Walsall, no contracts for council dwellings have been entered into since 1979. Nor is there any hope under existing policies that there will be any such contracts. I ask the House to imagine a borough of the size of Walsall with no contracts having been entered into for six years because the council simply has not sufficient finances. Land owned by the council is being sold because it cannot be utilised by the authority. A great deal of work needs to be undertaken on older and mainly pre-war dwellings in the borough. Again there is not the money to do it.
In passing, I mention the Rosehill estate in Willenhall in my constituency. It was built before the second world war. The tenants have waited for years for their properties to be modernised. The conditions there are terrible.
I have written to the Minister a number of times asking whether he would be willing to meet a deputation from the Rosehill estate. The Parliamentary Under-Secretary of State has replied saying that it is not a matter for him. His view is that it is purely a matter for the local authority. The local authority tells me that it simply has not the cash to carry out the necessary work. It so happens that the tenants intend to come to London this month on a deputation and to go to Marsham street. I wonder whether the Minister will be courteous enough to see them — or will he remain indifferent to their plight and, even though they have travelled down from my constituency, will not spend some time putting forward his point of view and listening to theirs?
I have mentioned my area, but Birmingham has nearly 25,000 council dwellings in need of modernisation and major repairs. Only 40 are being attended to this year, again because of the financial crisis.
Local authorities have the added headache of putting right the defective prefabricated concrete dwellings in their ownership. The work has to be done out of the annual housing investment programme. On top of all their other difficulties and headaches, local authorities have to rectify the defects in concrete dwellings that require urgent action. No extra money has been provided. The Minister says again that it is up to the local authorities.
I do not deny that there was a substantial increase in the money provided to owner-occupiers for improvement grants. It helped many people buying their own homes who in many cases would not have had enough to improve them. However, once the Tories won the general election of 1983, they were not interested. Today, as a result, we have a large number of defective houses whose owner-occupiers, many of them pensioners, do not have the means to put them right and to whom local authorities say, "We are sorry, but we have not the cash to give you improvement grants."
What sense is there in that? I remind the House that when the necessary work is eventually undertaken, it will be much more expensive. I cannot understand why the Government will not give owner-occupiers on limited means the chance to put their houses right and to make them adequate for the coming winter. But, again, there is no response from the Government.
In the last published data on housing investment in different countries, Britain is seen to spend just 2·1 per cent. of its gross national product on housing. That figure has to be compared with 6·1 per cent. in West Germany,


5·7 per cent. in France, 5·6 per cent. in Italy and more than 5 per cent. in the Netherlands. It is difficult to find an advanced country spending as little as we do on housing investment.
I suppose that in some respects today's debate is a trailer for the inquiry into British housing whose report is to be published on 25 July. That inquiry was under the chairmanship of the Duke of Edinburgh. There has been one leak concerning a possible recommendation about mortgage interest relief. But it would be unfortunate if that was the only attention that the media gave to that report. I have not seen the report, of course, but I have seen the evidence to the inquiry. That shows the damaging state of British housing and the need for the type of investment about which I have been speaking.
When the report is published, it should provide the opportunity for a debate not merely in the House but in the country and an awareness of what needs to be done, of the terrible condition of so much of our housing stock and of the misery and hardship of so many people who desperately require decent housing.

Mr. Dicks: How does the hon. Gentleman define housing need? Does he differentiate it from housing desire? The very definition often dictates a building programme the cost of which can be extremely heavy on the public purse. Will he define housing need?

Mr. Winnick: The hon. Gentleman is, I believe, the former chairman of a housing authority. I am myself a former member of a housing authority. When, as a Member of Parliament, I undertake my surgeries and when I receive letters from young married couples desperately in need of accommodation who have nowhere to live and no chance of buying their own homes, I understand perfectly what need is. I remind the hon. Gentleman of the huge numbers of people in bed and breakfast accommodation and the many people on housing waiting lists who desperately need accommodation. If the hon. Gentleman is saying that there is little housing need, it shows only too well that he is unaware of what is happening, probably in his own constituency.

Mr. Willie W. Hamilton: Why should my hon. Friend expect a sympathetic reply from a Government headed by the right hon. Member for Finchley (Mrs. Thatcher) who in the last few weeks has been photographed with her husband, Denis, looking at private houses built by Barratts adjacent to Dulwich college at prices of from £350,000 each? Is she in need of housing?

Mr. Winnick: I do not know whether the right hon. Lady is in need of housing, but I know that a great many of our constituents are, including many constituents of Government supporters. It does those constituents no service to try to minimise the need, the hardship and the housing misery that so many of them have to face.
This year marks the centenary of the Royal Commission on working-class housing. Its report 100 years ago revealed the ghastly conditions in Victorian Britain. It may be that some Government supporters believe that those were good days and good times.
I make no apology for repeating in this debate that there are two matters of the utmost importance to ordinary

people which, apart from personal happiness and good health, affect their lives more than anything else. The first is the chance to earn a living and the second is to be able to have decent and secure accommodation. The accusation against this Administration is that by their policies they have taken away the opportunity for many people to have jobs and have denied many an opportunity to have proper and adequate homes.
All that we are asking from this side of the House, as we have done on so many previous occasions, is that the Government should allow local authorities to build and modernise the accommodation that is needed. It is no use Ministers coming to the Dispatch Box to say that it is a matter for local authorities. It is futile to argue like that when local authorities like mine and so many others are prevented by Government financial policy from doing what is necessary and from carrying out their statutory responsibility.
How can I criticise my council, which is not under Labour control, for not doing what is essential when all the figures prove that it does not have the means to do so? The responsibility lies with the Government, with the Cabinet, and with those Ministers sitting round the Cabinet table in 1979 and 1980 who made decisions on housing that have caused so much housing hardship. That is where the responsibility lies and that is why it is so important that the matter is debated.
Time and time again Ministers have refused to accept the immense harm that their housing policies are causing. Part of our accusation today is that they have shown at times callous indifference to the housing plight. They are not interested. They boast about the number of dwellings that have been sold in the public sector, but they are completely lacking in interest when it comes to new build, modernising, or assisting now — not before the last general election but since — those owner-occupiers who do not have the means to carry out essential work such as roof repair.
I have no illusions. When I was interviewed by a local radio station about today's debate I was asked if I was likely to convince Ministers. I said, "No, I do not have the power." With all due respect, I do not believe that any of my right hon. or hon. Friends have the power to do that. The Government are blind, dogmatic and indifferent to the sort of problems that we are raising today. I do not believe we shall change Government policy, or that there is any possibility of change until we turn this Administration out, but, as Labour Members, our responsibility to our constituents is to raise these problems, and to use the House of Commons as a forum to explain the hardship and misery of our constituents and the desperate need for more rented accommodation.

Mr. Michael Latham: I begin, as always when speaking on housing or building, by declaring a long-standing financial interest in the building industry. I have been employed by a large building company since 1975 and have been connected directly with the industry since 1967. I am also a vice-president of the Building Societies Association, though that is an entirely voluntary and unpaid position.
It is disappointing, but perhaps not surprising, that the hon. Member for Walsall, North (Mr. Winnick) has chosen to draft his motion in terms which he knows well will be unacceptable to the House as a whole. We do not


debate housing often enough in the Chamber, and it would have been better if he had tried to concentrate today on areas of common ground on which the House collectively could press Ministers, rather than use words such as "deplore", "callous" and "disastrous", which will obviously push up the political barriers and lead to unproductive exchanges of political fire from behind tribal stockades.
Everyone who specialises in housing policy, as the hon. Member does, knows well that the trend, ever since the late Anthony Greenwood's housing White Paper in 1969, has been to concentrate upon improvement work and a steady diminution of rented construction in the public sector. Indeed, our biggest single problem in housing over the next decade will be to find the money to put right many of the structural and social horrors which arose from the mass system building campaigns of 20 years ago, which began with the big council housing drive instigated in 1963 by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) and my right hon. and learned Friend the Member for Hexham (Mr. Rippon), and which was continued by the late Richard Crossman and the late Anthony Greenwood until Ronan Point fell down in 1968.

Mr. Allan Roberts: Was there anything wrong with the low-rise housing estates which were built in large numbers during the housing drive that started in 1945? Was there anything wrong with the Welwyn Garden cities and the Wythenshawes? Are those problem council housing estates?

Mr. Latham: I thought that the hon. Gentleman knew more about housing and realised that most of the PRC houses that are causing problems now were built just after 1945. That is exactly what Airey houses were. The hon. Gentleman is showing his ignorance. He normally makes better interventions.
The biggest single period of improvement activity began with Anthony Greenwood in 1969. It was boosted dramatically by my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery), in the Housing Act 1971. That lasted until late 1973. There was then a further big push between 1982 and 1984, following the 1982 Budget. No doubt all sorts of things can be deplored and condemned under both Governments, but those are the realities, as opposed to the crude polemics. When the hon. Gentleman was talking about 107,000 starts in the public sector in 1978, he did not say that the figure for 1975 was 174,000.
I want now to forget about the regrettable motion and to concentrate on the wider housing scene. The current house building level in the public sector is very low. It follows a trend of sharp and virtually uninterrupted decline since 1975, both in starts and completions. The latest forecast from the National Economic Development Council expects a further decline over the next two years. My view is that the level of publicly rented construction is now so low that we should be giving it more impetus for specialised needs. There should be more activity to build for the elderly and disabled, and especially for those who are living alone. With an aging population and all too many family break-ups, all hon. Members know from their constituency experience that much of the available council housing stock is three-bedroomed family housing unsuitable for the elderly or single people. The private

sector has made a contribution in recent years, but it cannot deal on its own with all the specialised needs and there should be more public sector provision.
In regard to improvements, I accept at once that the 1982 scheme of widely available 90 per cent. repair grants was intended as a short-term boost for building and that it led to unsustainable levels of public spending. Nevertheless, the latest trends for improvement work are disturbing. A total of 77,600 buildings were improved with the help of grant or subsidy in the first quarter of this year, a fall of 26 per cent. on the comparable quarter of 1984. Repairs in the private sector showed a 58 per cent. fall. Of course, that reflects the withdrawal of the short-term 90 per cent. grant. Private sector conversions and improvements fell by 44 per cent. I fear that the 1983 imposition of VAT on alterations may be taking its toll, as well as the lengthy queues of grant seekers, many of whom will be disappointed because of the empty coffers of local authorities with their reduced housing investment programmes.
That is why I must express regret yet again to Ministers at the decision implemented as from 1 April to reduce the proportion of their own capital receipts that local authorities can spend in any one year. I am thankful for the small mercy announced last week that there is to be no further moratorium, but I wish that Treasury Ministers would consider the real economy before requiring reductions in capital receipts spending from 40 to 20 per cent., which, incidentally, I voted against.
The real position in the construction industry is that contract work for medium and small firms remains very hard to get and that margins are tight. The large firms have been bidding for medium-sized contracts which they would not have considered a few years ago, and the small reputable builders are being outflanked for domestic repair and improvement work by unregistered traders, some of whom are cowboys, and by no means all of whom ensure that every penny of the tax that they lawfully owe finds its way to the Inland Revenue.
The industry is far from overheated. I am sorry to read that Ministers are still rejecting calls for more construction, on the ground that it would all be carried out by imported plant and would make little contribution towards reducing unemployment. Improvement work, for example, uses little plant and is heavily labour-intensive. It also uses plenty of materials, such as bricks, tiles and guttering, most of which are made by British workers in British factories. It would cost. the Government little, if anything, if local authorities were able to use more of their capital receipts to provide more improvement grants. They already have the money, and a high grant programme would generate considerable activity in the manufacturing sector, which is allied to construction.

Mr. Frank Field: Is it not true that that argument applies also to new build? The Anchor Housing Association, which operates in my constituency, analysed what happened to its expenditure and found that, even for new build, practically all the sums were spent on wages, contributions, tax and national insurance, and that few materials, apart from timber and kitchen equipment, were imported. In looking for a means of stimulating the economy and increasing employment without sucking in imports, should we not pay attention to that aspect of the matter?

Mr. Latham: I agree with the hon. Gentleman's general proposition and have advocated it many times. However, I am concentrating on improvement work, because I believe that that is where the main needs are for our housing stock.
I must say reluctantly that I think that the Green Paper on improvement grants, which was produced the other day, is a deeply disappointing document. It is subtitled "A New Approach", but the newest aspect of the approach is that it envisages following these proposals without much public money. The press notice that accompanied the Green Paper said that owners were primarily responsible for their own properties and
should receive appropriate help and encouragement in fulfilling that responsibility.
Unfortunately, the Green Paper's proposals will result in the appropriate help for most people being nothing.
I accept that grants were too widely available in recent years, and there is a strong case for targeting them more to properties that need renovation and to people who need more help. Indeed, the Public Accounts Committee, on which I serve, said so. The proposal in the Green Paper to restrict any mandatory grants or the new discretionary loans to persons eligible for housing benefit is far too harsh a qualification. I agree that more needs to be done to improve the take-up of grants by the elderly and the unemployed. Last year, the second permanent secretary in the Department of the Environment, Sir Peter Harrop, told the Public Accounts Committee that those people were under-represented among grant receivers. It is possible that the new equity-sharing, interest-free loans proposed in the Green Paper will help the elderly, but we all know that many older owner-occupiers do not bother to apply for grants, not only because of the cost of the work, but because they cannot deal with the fuss and bother of having builders about the house. They prefer to put up with unacceptable housing conditions rather than experience the initial disruption that would lead to a better environment. That is a very human reaction, and nothing in any Green Paper can change it, nor should we try to do so against their wishes.
I shall outline one simple example of the people who will be excluded from grants under the new arrangements and who are not upper middle class trendies gentrifying Islington. A young and newly married male shop assistant and his hairdresser wife have a combined income of, say, £140 a week. They have not yet started a family. They want to buy a small terraced house in a medium-sized midlands town. This house is just within their financial reach with a joint mortgage, but needs a lot of work to be done on it. They will not be eligible for housing benefit. They may not be able to afford to buy a new house, and under the Green Paper's proposals they will be entitled to no grant to help them to improve the 80-year-old home which they want to buy. Surely such people should receive some help or encouragement.
The alternative would be public sector rented housing, if any were available, or the terraced house remaining in an unimproved state and their standard of living deteriorating I should have thought that helping such people who want to help themselves would be a high priority for a Conservative Government. I hope that Ministers will use the extended consultation period, for which the Green Paper provides, to go back to the Treasury to insist upon a wider spread of availability of grants or loans under the new system. The present position

will be unreasonably restrictive. It will lead to less work for the industry, a sharp decline in the amount of improvement work and a deterioration in housing stock as a whole. I hope that the White Paper, or Bill that follows the consultation period, will not have the Treasury's fingerprints all over it. It should be directed primarily towards
Encouraging the Repair and Improvement of Private Sector Housing",
the very words on the front of the Green Paper, and not towards reducing the public sector borrowing requirement.
I hope that that section of the Green Paper dealing with cowboy building will be significantly strengthened. The small works sector of building is plagued with fiddles and abuses, which were well revealed by the Director General of Fair Trading in his consultative document in March 1982 and his final report in June 1983. Some atrocious rip-offs take place and there is plenty of shoddy workmanship. To some extent, the public are the authors of their own misfortunes. They have not supported the warranty schemes which have been produced by the Building Employers Confederation or the Federation of Master Builders, preferring to take the lowest price offered by an unregistered trader and sometimes paying the real price afterwards in poor quality work.
It is three and a half years since the Director General of Fair Trading suggested that local authorities should restrict improvement grant to work done by reputable firms, and two years since he firmly made that recommendation. It is disappointing that the Green Paper repeats and endorses Sir Gordon Borrie's proposals two years later, but only on the basis that the Government intend discussing them with the building industry and local authority associations. What is there left to discuss? The proposals are clear and are spelt out in the Office of Fair Trading report. Why can we not implement them, as a number of local authorities are already doing?
We should be involving the building societies and banks, getting them to ensure that the finance that they extend goes to work performed by reputable traders who pay their taxes and build to a standard that justifies their loan and enhances the value of the house. We should be coming forward with the wider package of consumer protection measures that were recommended two years ago by the Director General of Fair Trading. Those measures included cooling-off periods of at least seven days for double glazing or solar heating contracts signed in people's own homes, and a legal duty that home improvement contracts should be in writing.
Such protection is already given for insurance policies and for some forms of credit agreements. It is high time that some action was taken in the home improvements sphere in which contracts of several thousands of pounds may be involved. I hope that Ministers in the Department of the Environment and in the Department of Trade and Industry will act speedily and with determination to protect the consumer in his own home from the wily con man, the unskilled itinerant jobber and the high pressure salesman.
I have one final proposal about improvement grants which is radical and would require legislation. Local authorities will always have problems regulating the flow of improvement grant money. When the tap is turned on fiercely, as in 1982, the bath sometimes overflows all over the floor. When it is abruptly turned off, as in 1984, the plug is pulled out as well and the bath runs dry. It took months for local authorities to gear themselves up for the


last big push on grants and, by the time things were in full swing, the economic position was changing. We ran into cuts in capital receipts spending, moratoria and retrenchments.
The system of local authority RSG penalties, targets, annual accounting years, and so on will always cause major hiccups in running a long-term improvement drive. As local authorities act largely as financial agents for the Department of the Environment over improvement work, why not transfer this agency work lock, stock and barrel to the building society movement? Why not say, "This year, the Government will allocate, say, £700 million for improvement grant work"? That is about the net income for the building societies in one poor month. Why not say to them, "We shall reimburse you up to that extent plus" — or, if necessary, minus — "a sum towards your administrative costs. You can then advance it for home improvements and top it up, where necessary, with further mortgage advances"? Building societies do not have the same financial constraints as local authorities. They can act more flexibly, are highly respected and deal every day with the public. They are non-profit making and are supervised by the official Registrar of Building Societies.
I commend that proposal to the Government. I point out that this November we may well have a building societies Bill. I believe that radical action of this type would help to give new momentum to the Government's housing strategy. I hope that it will be seriously considered.

5 pm

Mr. Robert C. Brown: The House should be grateful to my hon. Friend the Member for Walsall, North (Mr. Winnick) for having given us this opportunity to debate the nation's serious housing situation.
I am delighted to take up the remarks of the hon. Member for Rutland and Melton (Mr. Latham), who always speaks with deep knowledge of his subject and with authority and courage. On Friday morning of this week I shall be joining the hon. Member for Berwick-upon-Tweed (Mr. Beith) at an open forum on housing, which is being organised by the northern region of the National Housing and Town Planning Council. The secretary of the council, Mr. Birkett, told me this afternoon that, in spite of personal approaches to many Tory Members of Parliament, the Tory Chief Whip and the Tory north regional office, he has not succeeded in getting one Tory Member of Parliament to grace the platform on Friday morning. So much for the confidence of Tory Members of Parliament in their Government's policy.
I do not think that the House will be surprised that I intend to devote the whole of my speech to the housing problems of the city of Newcastle upon Tyne. All the capital figures to which I shall refer will be at constant 1983–84 prices.
The city's capital programme is part of a declining overall budget, such that the reallocation of resources to areas of growing need is not an option that is open to the council any longer. That is particularly the case for housing. Because of the control of capital expenditure by central Government, the city has been unable to meet housing needs since the Government were elected. Since 1980, more than 3,600 houses have been sold, reducing the city's stock to 47,000.
Two problems have arisen from those sales, but I am not complaining about the sale of council houses. The first

problem is that the sales have been all—or almost all—in areas of better-quality housing in the more attractive estates, such as the Grange estate in the Gosforth area of my constituency. By September 1983, hardly any flats or maisonettes had been sold, whereas 11 per cent. of our three and four-bedroom council houses and 10 per cent. of our large bungalows had been sold.
Secondly, although those sales have generated capital receipts, the council has been allowed to spend only a portion of this income—let me emphasise that it is its own money—on capital investment in new build or the improvement of present stock. Therefore, it has been impossible to replace lost houses by new investment. My hon. Friend the Member for Walsall, North was right to say that council houses which have been sold should be replaced, and the council should be allowed to build new houses.
I say good luck to all those who have bought their own council houses. They are getting a good buy. In the main, they have lived in the houses for many years and many will probably finish their days in those same properties. I have no time at all for the cant and humbug that council houses should not be sold to sitting tenants. Having said that, councils should have the right to spend the money derived from those sales. The ratepayers have paid for the houses that are being sold, so they should recoup from the sale of the houses and spend their own money, as it were, on improving the existing housing stock, because improvement is needed urgently.
Between 1979–80 and 1983–84, Newcastle city council spent £150 million on capital expenditure, including capital receipts from council house sales. In that period the housing improvement programme allocation from the Government was cut from £31·6 million to £14 million, and it is only £11·2 million in the current year. The Minister does not need to be a mathematician to realise that that is a savage reduction in the housing improvement programme. Capital spending in the past five years was 40 per cent. less than in the previous five years.
Housing takes 70 per cent. or more of the capital programme, and as a result it has taken the brunt of the cuts imposed by the Government. Since 1982–83, we have not been able to build any general housing for rent. I do not recall any period in my lifetime, apart from odd years during the war, when the city council has not been able to build homes to rent. In the last full year of Labour government, the city council completed 1,368 new houses. Last year the figure was nil. In my view, it is a monumental disgrace that any major city should find itself in a position of not being able to build one house to rent.
The rate at which we can undertake major repairs, rehabilitation, and improvements is pathetically inadequate. To maintain the quality of the present stock, 5,000 pre-war houses still need full modernisation, 3.000 pre-war houses need major external repair and 10,000 post-war houses have had no investment in their physical fabric since they were built. Thus, completed moderni.sations—of which there were 650 in 1978–79—were down to 298 in 1982–83, and that has happened in a period of ever-increasing housing need. In 1981–82, there were 75 applications each month from homeless people who were priority cases. The latest figures show more than 90 applications each month. That means that we have 20 per cent. more homeless people now than in 1981–82. No Minister should be proud of that fact.
The same sad story can be told of the elderly. At the start of 1981, there were 2,500 old people on the city waiting list. In April 1984, the figure was 4,000. Those people have no hope of being offered housing in the near, or even in the far, future.
The housing programme of Newcastle, like every other major city, has been mercilessly reduced as a result of the Government's economic policy. Within an increase of 8 per cent. in public expenditure, largely to cover the cost of an added 2 million unemployed, housing expenditure has been cut by 70 per cent.
All areas of the country have been affected, but none so badly as the northern region, which has had savage cuts inflicted year after year in the housing improvement programme allocation. The effect has been devastating. The impact of cuts on the scale suffered by Newcastle, coupled with the reduction in the use of capital receipts —our own money—has been alarming in every type of programme to meet housing needs. I re-emphasise that it is three years since any family housing has been started.
Our programme of sheltered housing, which is so badly needed to get the elderly into the type of homes guaranteed to help their survival through cold winters, has been cut from four units to two units each year. It is more than likely that next year will see no new starts at all. What a devastating future for old people who have served their country and locality well.
The tragic reduction in council house building was, sadly, matched by a reduction in private house building until 1981. The upsurge since then has had only a marginal effect on waiting lists. In Newcastle, more than 8,000 people are wanting council homes for the first time. The council has encouraged — the Minister will be pleased about this — "build for sale" schemes, but they have added only 350 new homes in the city in the last three years.
Like many hon. Members, every weekend I see unhappy people who are desperate for a decent home in which to live, or who plead for help with badly needed repairs. Much of our weekends are taken up with the harrowing misery caused by the actions of the Government.
I ask the Government to increase substantially the level of basic HIP allocation so that housing authorities may respond to the Government's stated priorities of improving housing stock and of providing accommodation for those who cannot afford to buy or for those with special needs.
I ask the Government to introduce a three-year programme of investment so that we may bring to an end the stop-go spending policies which have had such a damaging effect on housing programmes, and not least on the construction industry.
I ask the Government to allow local authorities to be permitted to spend their own capital receipts from the sale of their own assets without any further interference from the Government.
I make those requests even in the face of the Government's latest public expenditure White Paper, for I cannot believe that further cuts in housing expenditure in the public sector are acceptable either to the public of Britain or even to the vast majority of Conservative Members. I can well understand why not one Tory

Member wishes to travel to Newbiggin-by-the-Sea on Friday of this week to defend the Government's shameful housing record.

Mr. Richard Ryder: I congratulate the hon. Member for Walsall, North (Mr. Winnick) on initiating the debate and on the way in which he moved the motion, but I must at the outset take him up on the point that he made about first time buyers, because that issue is constantly being faced by the Government. I had hoped to hear some advice from him about the way in which Labour Members would deal with it were they in government, but alas such advice was not forthcoming.
The Government's policies which the hon. Gentleman attacked are based mostly on extending freedom of choice and competition in the housing market. I congratulate the hon. Member for Walsall, North on assisting the process of extending competition and broadening freedom of choice, for he supported the House Buyers Bill in December 1983, of which I was a sponsor. That measure, the promoter of which was the hon. Member for Great Grimsby (Mr. Mitchell), was designed to break the solicitors' monopoly on conveyancing and to reduce conveyancing costs. Since then, according to the Consumers Association, conveyancing costs throughout the country have fallen by 30 per cent., despite protestations in December 1983 from the Law Society and many solicitors that conveyancing prices were not too high.
Much else has happened in the interim. A consequence of the introduction of the House Buyers Bill was a commitment from the Solicitor-General, reaffirmed by the Prime Minister in the House on 20 December 1983, that the Government would bring forward legislation to enable solicitors in banks and building societies to undertake conveyancing.
Since December 1983 we have had a rearguard action from the Law Society, suggesting that conflicts of interest would arise, if solicitors in banks and building societies were enabled to undertake conveyancing. The Law Society and many solicitors overlook the fact that the legal profession is already riddled with conflicts of interest. For example, solicitors often act for the borrower and the building society. Moreover, solicitors often receive commissions from building societies for advising clients to invest their money with them.
It is sheer hypocrisy, therefore, for solicitors and the Law Society to mount this rearguard action on their own behalf and to claim that conflicts of interest should prevent the Government from introducing legislation originally promised by the Solicitor-General and later reaffirmed by the Prime Minister.
The Law Society's rearguard action has been taken seriously by me. Until recently I had an open mind on the subject, but that has been closed by two recent speeches, one by the Director General of Fair Trading and the other by Professor Julian Farrand, the chairman of the conveyancing committee established by the Lord Chancellor. Both speeches were made at the Building Societies Association conference in Eastbourne, a town ably represented by my hon. Friend the Minister for Housing and Construction. I am sure that my hon. Friend does not need reminding of the content of those speeches, but for the benefit of hon. Members who may not have heard them I shall quote briefly from them.
Sir Gordon Borrie, Director General of Fair Trading, said:
I am sure, for example, that house purchase would be much more convenient for the buyer if a building society were allowed by new legislation to offer not only loan finance but also various other related services such as surveying and conveyancing under one roof. If building societies (or some of them) chose to develop 'one-stop shopping' for housing in this way it will also lead to greater competition with others who provide such services and this should benefit house buyers whether they opt for 'one-stop shopping' or not because competition from building societies will keep everyone on their toes.

Mr. Ashby: I have no interest to declare, because, as a barrister, I am not allowed to convey property. That is solely within the province of solicitors. Is my hon. Friend aware that he is just substituting one monopoly for another and that there will be no protection for purchasers if building societies are permitted to convey property? Has he considered whether allowing building societies to convey property is in the best interests, not of the wealthy — they will always have solicitors — but of the most vulnerable, namely, the general run of people who go to building societies?

Mr. Ryder: I am grateful for the intervention of my hon. Friend, who is a barrister, not a solicitor, and knows a great deal about the subject. I shall deal with that matter in my closing remarks, because the Consumers Association has just completed a survey which shows that the reverse is true.
Professor Julian Farrand also spoke at the Building Societies Association's annual conference in Eastbourne. Professor Farrand's committee has reported on whether the solicitors' conveyancing monopoly should be broken. He said in Eastbourne:
I would have thought that logically the practice rule prohibiting solicitors acting for vendor and purchaser in a conveyancing transaction, with its list of exceptions, should apply equally to solicitors acting for lender and borrower—for mortgagor and mortgagee. In so far as it does not apply, then I think the Law Society is on weak ground in suggesting that there might be unsurmountable conflicts of interest, if building societies offer this integrated house buying service.
I stress that I had an open mind on this subject until those two speeches were made. The fact that they came from the Director of Fair Trading and Professor Farrand — probably the leading authority on land law — has convinced me that it would be a great mistake if the Government were not to maintain the commitment made by the Solicitor-General and the Prime Minister.
It seems that the Government are still considering what legislation to introduce. There is a real risk that the Law Society and its friends have managed to convince some Ministers—I dare say not all—that it would be unwise to introduce legislation. Yet I hope that legislation to enable solicitors in banks and building societies to undertake conveyancing will he introduced in the next Session, so that the promises will be kept.
I hope that the legislation will ensure that a code of practice is drawn up so that no potential conflicts of interest arise. People can consult solicitors about their mortgages if they wish to have independent advice. If they wish to pay more money for the independent advice of solicitors who are not employed by banks or building societies, they are free to do so.
The recent survey to which I referred in response to my hon. Friend the Member for Leicestershire, North-West (Mr. Ashby) showed that only 11 per cent. of home buyers

consult solicitors about mortgages. There is no reason why in future they should not consult solicitors independently of the building societies and the banks.
If I believed that legislation would reduce freedom of choice and competition, I would oppose it. If I believed that it would reduce the number of banks and building societies, I would oppose it. If the Director of Fair Trading were against the legislation, I might also be against it. None of those conditions applies. That is why I hope that legislation will be introduced in the next Session to help first-time buyers and home owners who, on average, move once every seven years. In my constituency such legislation would be of great assistance to young couples. I shall support such legislation.

Mr. Simon Hughes: Charles Dickens, who had some links with Southwark, wrote "Bleak House". It is no coincidence that the last edition of a newsletter put together by a respected Southwark organisation, the Housing Advice Research Unit, was entitled "Bleak Housing".
This debate is about the prospect of housing for the future. Although the Liberal party does not share the views of the hon. Member for Walsall, North (Mr. Winnick), I can say without reservation that the Liberal party and I agree with every word in his motion. The motion states that Parliament should deplore the Government's housing policy. Without exception, the prospect is one of complete darkness, with little relief from a vision of gloom.
There is a comparison which comes to mind between the attitude of the Secretary of State and his cohorts to housing and King Midas. Everything that King Midas touched turned to gold, and he found that that was not satisfactory. The Secretary of State makes a positive decision not to touch most of our deteriorating housing stock. There is an unmitigated chorus all round him from every section of the community while he watches and witnesses everything that he does not touch crumble away. The Minister for Housing and Construction, who is an exponent of the great she-god monetarism, looks down and applauds the market place as the place to assess the validity of Government policy. The Minister should be aware — I believe that he is beginning to get the message—that down there in the market place hordes of people are looking up and asking, "What about us—the homeless and the badly housed?"
As the Minister will know, bad housing is not only a problem in Southwark and Bermondsey. This week, our eyes are focused on Brecon and Radnor, which I visited last week. On a council estate in Crickhowell, I called on a lady with six children, whose husband must work away in Wigan for six days a week because he cannot get a job locally. Her house is in appalling condition, and she would like to move, but Brecknock district council has no alternative accommodation to offer. Therefore, she must bring up her children in poor accommodation.
The premise from which those of us who oppose the Government's housing policy start is that it is fundamentally misconceived, because it derives from an economic policy that is fundamentally wrong. It does not do what the House should accept should be the criterion for housing policy — meet the housing needs of the British people.
The construction industry has suffered especially from the Government's fiscal and financial policies. Since the


Government came to power in 1979, there has been a long series of sales of public assets, which bring in billions of pounds a year, and the right-to-buy legislation has produced the massive sale of council housing, which is also bringing in billions of pounds a year. It is the wrong time to cut, because now that we have this money we should be funding expenditure on housing needs. It is no good watching the crack in one's wall get bigger and bigger, and saying, "I cannot afford to borrow now, but I might be prepared to do so later." After about six years, that crack may be irreparable and the house may be falling down. The Government should follow the advice that is given to them from many quarters and increase their public sector borrowing, put that money into housing, and give us the housing infrastructure that we need.
The Minister will have seen the report published by the Building Employers Confederation a couple of weeks ago, which made it clear that such a policy would not be inconsistent with other things that the Government would have us believe they want. Research shows that investment in building would offer the Government better value for money than the tax cuts that the Chancellor of the Exchequer continually promises, but which no one believes can be delivered, and challenges Government assumptions that the cost per job would be prohibitively high.
The research shows — the figures are important, because the Minister always argues about figures—that £500 million per year spent on building over five years would create 55,000 jobs at a cost to the PSBR of £198 million per annum, or £3,600 per job, whereas a £500 million per annum stimulus in the form of tax cuts would create only 20,000 jobs at a cost to the PSBR of £278 million per annum, or £13,900 per job. One does not have to be a mathematician, let alone an Isaac Newton, to realise that, on the figures produced, the Government's policies are entirely misconceived.
We hope, therefore, to hear today that the Government are beginning to think again. We hope perhaps to hear that they will respond to the Audit Commission's report on capital spending, which made it clear that the restraints on local authorities, preventing them from spending the money that they have raised, are a misguided policy.
The Secretary of State for the Environment said that he welcomed the report of the Audit Commission and then, with bland understatement, went on to say:
The Commission has drawn attention to flaws in the present system which the Government had already identified". —[Official Report, 8 May 1985; Vol. 78, c. 786.]
The flaws are so enormous that I hope the Government will accept that the system must be changed in the coming year. Local authorities, as one of the three strands of those responsible for building housing, need the money to spend to meet the demand that still exists for rented accommodation in the public sector. I ask the Government to accept that they have a duty to each of the three strands, the public sector, the private sector, and the voluntary sector — the housing association sector through the Housing Corporation. As I said earlier, I hope that the Government have already begun to respond to that duty.
There was a report in a journal that, after a meeting that the Minister and his colleagues held with representatives of the voluntary sector in May about homelessness, the Ministers appeared to be alarmed; they appeared to be

rattled by the severity of the problem. Therefore, I hope that the Minister will respond today to some of the points put to him at that meeting. In particular, I hope that he will say that his Department will support the proposals to give the Land Registry the ability to draw attention publicly to empty property in the private sector—that is where most empty property is—so that, with a publicity campaign supported by the Government, it can be opened up for use. I accept that the Minister is concerned about the enormous amount of unused empty property. I hope that he will do more than issue the circulars that he has issued since he became Minister, and will attack the problem of the 500,000 empty homes in the private sector which could be used without the expenditure of a great deal of effort and money, because they are already available.
I ask the Minister to say today that he will follow that proposal, and others, and perhaps do something further about lifting restrictions on mini housing association grant, as well as requiring local authorities to keep a register of empty properties. I ask him also to impose on local authorities a duty to consider the use of empty property. The position is desperate. We need to use all the empty properties that are available if we are to begin to solve the problem of homelessness, which is particularly acute in the cities and among the young.

Mr. Allan Roberts: The Minister has removed restrictions on mini-HAG without making an extra penny available through housing associations grants or bringing empty properties into use. I do not altogether agree with the hon. Member that all the empty properties in the private sector can be brought into use without any expenditure. The expenditure required is less than is needed to build new houses or to improve and renovate old houses, but extra money is needed, and the Minister's statement is without any real value unless he makes extra money available for mini-housing association grant for empty properites.

Mr. Hughes: Not only do I agree with the hon. Member; it has been the underlying theme of the last three announcements about housing: the inner-city action teams — co-ordination but no more money; the mini-HAG changes — no more money; and the last inner-city initiative for bringing local authority housing back into use — new scheme, no money. That does not show any great commitment so far, and I accept what the hon. Gentleman said.
In addition to trying to use empty property, we have to look after property which is in a bad state of repair. We gather that the Green Paper will not now result in legislation in the coming Session. Once again we have a statement of policy without the provision of more money. Indeed, we shall see a reduction in the money provided for home improvement. That is a bad and misguided policy, for as the condition gets worse the amount of money needed becomes greater.
There should be requirements for basic standards of habitation. In the private sector there should be a system of mandatory grants. Means testing for unfit owner-occupied property would deter applicants and not be consistent with the aim of ensuring the survival of our housing stock. I accept that money is tight, but we have to look at the greater requirement, which is to ensure that there are homes fit for people to live in, and more fit rather than less fit in the future. The Government's policy will not achieve that aim.
All homes should have safe and adequate wiring as a condition of payment of part of the mandatory grant. Action must also be taken with regard to unfit unoccupied homes. I should like the Minister to consider mandatory action by local authorities, offering owners the choice of taking action themselves—there are parallels already in housing legislation—or having action taken by the local authority and a charge being made to the owner. There are parallels and precedents, and I ask the Minister to extend the provision beyond what is now provided by legislation.
The hon. Member for Bootle (Mr. Roberts) referred to the housing associations and Housing Corporation sector. I hope that the Minister will respond today to the Housing Corporation's corporate plan, which was published two weeks ago. I would also welcome some comments from him on the report of the working party set up by the Institute of Housing, in which local authorities and housing associations took part. The Government have said that they wish to decrease municipal housing and thereby enlarge the voluntary sector, but we need an increase in municipal housing and in the voluntary sector too. Therefore, the housing associations and the Housing Corporation need more money. It is not possible to support their good work—which they have proved they can do —without making more money available. I do not mind whether it comes from the finance houses, the banks or the building societies, as opposed to the Government kitty, but it must be made available.
Ministers have received representations about money for areas such as the London docklands. Unless money is provided now, the private sector — in most cases at prices well beyond the range of local people—will take up the land and space available, and the opportunities for large-scale housing association developments for rent for the local community, co-operatives, and so on, will be lost, and, once lost, will not return.
There are more than 100,000 people waiting to move from one local authority to another within London, either because their families or their jobs have moved. I ask the Minister to help the local authorities in every way he can to provide a much more effective system of nomination and transfer. The system has not been working well. There are many examples of delays. When people make requests to move, they should be considered quickly and efficiently, enabling them to occupy properties which would otherwise remain empty.
I expect that within the next two weeks the Local Government Bill will be coming back to this House. That is, of course, the Bill by which the Government intend to abolish the Greater London council and the metropolitan county councils. The Minister knows that a key provision of that Bill removes the rights which at present are vested in London local boroughs and which enable them to enforce as against the GLC the repair and renovation of the housing stock which was transferred from the GLC to the boroughs. That transfer mostly took place in 1981, though in the case of Tower Hamlets it occurred only today.
Southwark has 23,877 former GLC properties, most of which are in my constituency. The GLC intended to spend £128·5 million on renovating some of those homes, most of which are flats, on appallingly run-down estates. The sum allocated to Southwark for that work this year is £24·9 million and for 1986 it is £24·1 million. Those sums are inadequate. The Government should honour the word of a previous Secretary of State for the Environment who promised that those properties would be made fit to live

in. Estates, such as the Tabard garden estate, the Draper estate, the Rockingham estate, the Alvey estate and others along the Old Kent road and around the Elephant and Castle, are in an appalling state and require renovation. The Minister is aware of the condition of those properties, and he must guarantee that the repairs will be done.
I beseech the Government to reconsider their London housing policy before they steamroller people with their proposals to abolish the GLC and forget that people's lives, homes and children would be affected.
The Minister knows that one of the key problems in Southwark is that there is no new public sector housing. Land is being developed apace in the docks. We must ensure that the price of the land, whether for private sector housing association or local authority development, is such that it will provide the opportunity to meet the needs of the local community. It is wrong that along the river two-room flats are being built at a cost of £250,000, while there are pensioners whose heating systems do not work and other people who have nowhere to live.
Resettlement centres, such as the Spike centre at Camberwell, will close soon and the single homeless will have to go to the local authority to be housed. The mentally ill will be returned to Southwark, from places such as Darenth park, to be rehoused. Unless more housing is provided, such needs will not begin to be met.
I recall that a previous Conservative Government accepted the premise that we should be building a country fit for heroes to live in. The Macmillan Government continued building so that we could house people belonging to this country. I ask the Minister to accept that it is now his duty and that of the Government to build and provide houses fit for ordinary people to live in. He must fulfil that obligation.

Mr. Roger King: I congratulate the hon. Member for Walsall, North (Mr. Winnick) on initiating this debate on housing. I represent an outer city constituency with inner city problems. Those problems are dominated by housing.
One must first establish the size of Birmingham's problem. The Labour administration in the city of Birmingham has no doubt that housing is a major catastrophe. It has spent a not inconsiderable sum of money on informing every householder and municipal tenant of the size of that problem. It has issued a glossy brochure and other informative literature which show that the Government allowed the city to spend about £70 million this year on housing, whereas the problem can only be tackled by the expenditure of £220 million per year for the next 10 years. It is not surprising therefore that some of my constituents have written to me to ask where the balance of the money will come from and why the Government will not fork out the finance necessary to solve the city's housing problem.
A breakdown of where the expenditure is needed shows that some is required in my constituency. Where is the funding to come from? I replied to my constituents that the Government have allowed £70 million worth of expenditure. However, the Labour administration has said that it ought to spend £220 million. I had to say that no Government could possibly afford £220 million a year.
I may be wrong, as I have not consulted any member of the Labour party or of a possible future Labour Government. Their policy may be to find £220 million for


the city of Birmingham for the next 10 years. If Birmingham has problems with its 135,000 municipal dwellings, the same must apply to Liverpool, Manchester, Sheffield, Nottingham and other cities. One could multiply £220 million per year, five, six, seven, 10, 12 or 15 times to accommodate the problem.
I do not disagree with the sum involved, but if it is Labour policy to find that sum I ought to alter the letter that I sent to my constituents and tell them that a future Labour Government will find £220 million for the city of Birmingham for the next 10 years. I look forward to anticipating that that pledge might be forthcoming this evening.
The problem of defective housing affects a number of my constituents. Those problems have been exaggerated and have now been expanded to cover all forms of prefabricated reinforced concrete housing. Constituents anxious to sell properties which they bought 10 or 12 years ago, or more recently, seek advice on how they can sell those properties. There is nothing wrong with the properties. They are structurally sound and have been surveyed by estate agents and building societies and found to be perfect, but they do not attract a mortgage. Those properties are blighted because they come under the heading of PRC-type houses.
Building societies should pay more attention to the problems of those people who are having difficulty selling property in order to move to a bigger home or to relocate somewhere else. It is wrong to blight a type of house because it is constructed in a specific way when all forms of survey show that it is perfectly sound. Building societies should surely treat each application on its merits. If the property is sound, the society should grant a mortgage and encourage people who have invested their savings in that type of property to sell and move, as the owners of more conventional types of housing do. Smith-type housing continues to cause difficulties and the problems in the city have recently been highlighted by the publication of a sizeable report on the structural condition of Smith system housing. Most hon. Members representing Birmingham, and others, will have had copies of that report.
The city council has considered the problem of Smith houses which have been built elsewhere as, to qualify under the Housing Defects Act 1984, the defect must be found nationally. The council reported on the condition of Smith houses in Leicester, Cardiff, Wolverhampton, Sandwell and north Warwickshire—3,228 in all, not all of which have been purchased. The report concludes:
It is obvious from the investigations carried out of Smith's houses in the various authorities visited that the inherent defects in the system are manifesting themselves throughout the country. In all cases other than Birmingham, the defects apparent are not associated with 'sulphate attack' to the concrete ground floor.
In addition to the defects found elsewhere, Birmingham has a problem with sulphate attack to the concrete ground floor.
The report continues:
The defects in all authorities visited relate to inadequate tying in of the panels, inadequate lateral restraint at both first floor level and eaves, thermal and moisture movement, and rusting of the reinforcing handling bars … It would appear that the Minister, when making his decision not to designate Smith's houses, was misled or disregarded the Building Research Establishment's published findings regarding the national level of defects and the future maintenance problems of Smith's houses.

I do not necessarily agree with the latter conclusion, but hope that, in the light of that report, my hon. Friend the Minister will examine it to see whether Smith houses can be included in the mandatory scheme. The problem associated with Smith houses is national, so they should qualify under the Housing Defects Act.
Another challenge open to us is the role of future house sales, especially in the municipal sector. Housing sales have tapered off somewhat in the past 12 months or so. Several theories to explain that have been put forward. One is that the threat of unemployment makes people unwilling to embark on the financial risk of a 25-year mortgage. I believe that many tenants simply do not wish to buy, although they have the choice and the funds. The problems of defective housing have served as a warning of what might happen, and people might not wish to live in the same area any longer.
The problem is how to harness the desire to buy and the opportunity to buy. I should like there to be a compulsory system of sale vouchers which would be issued to tenants up to a maximum of 60 per cent. of the value of their house. The vouchers could be used to buy the property presently inhabited or one in the private sector. I hasten to add that the vouchers should not be of the same value when used as a deposit in the private sector. Somebody who qualifies for a 60 per cent. discount to buy a council house should not be able to go along to Barratts and wave a 60 per cent. discount in front of the company. A 60 per cent. voucher on the municipal side might qualify for a 20 per cent. discount on a new house in the private sector.
The advantage of such a scheme is that tenants would go into the private market and vacate a council house, which the local authority would get for a small sum. It might be argued that the scheme would increase public expenditure, but local authorities are still building some houses. A brand new council house and all the infrastructure that it involves costs about £40,000. If a local authority can pick up a council house for just 20 per cent. of its market value, it would have a bargain. I hope that any future housing programme will note the opportunity offered by tenants being given some incentive to purchase houses in the private sector.
The one lesson that we have learnt from the problems of the public housing sector is that it would be folly to build on past mistakes and to think that we can build our way out of difficulties by providing ever more council houses. There is no sign of a growing desire for municipal housing. Even if Birmingham had a great deal of available land on which to build vast estates, it would be foolish to build them and to create in 10 or 15 years the very problems that we face now. Many people who want to buy a house must be encouraged to buy. As a result of the sensible policies that the Government are pursuing, they can afford to buy. Such people are being encouraged by various incentive schemes.

Mr. Chris Smith: Is the hon. Gentleman seriously telling my constituents—the 7,000 on the waiting list and the 9,000 on the transfer list — that they do not really want good and decent council accommodation? Is he seriously saying that they can spend £100,000 on buying accommodation in the area in which they want to live?

Mr. King: The hon. Gentleman has raised an interesting point, as he has mentioned the housing waiting


list. What is a housing waiting list? Every time we learn of a housing waiting list in Birmingham, we hear that it has increased by another 5,000 or 10,000. There is no great number of people sleeping in cars and tents. I accept that we must build more houses, but we must also consider what housing lists are and how they are made up. They are bandied about as evidence of huge pent-up demand for municipal housing, but I think that we should find out what the level of demand is.
Of course people want good, decent housing, but people should be got out of municipal housing into private housing, thus enabling those who must have municipal housing to be catered for. It is no remedy to build more and more of the same. We now realise, to our cost, that that causes even greater difficulty.

Mr. Allan Roberts: I am pleased that my hon. Friend the Member for Walsall, North (Mr. Winnick) has introduced this motion, which I support fully. A debate on these matters is urgently needed as the housing crisis is getting worse throughout the country.
I am pleased that the hon. Member for Hayes and Harlington (Mr. Dicks) has returned, because he challenged the Opposition to give some idea of our assessment of housing need. I am happy to stand by Conservative-controlled Sefton's assessment of need as supplied to the Secretary of State and the Minister for Housing and Construction on the form that the Minister sends out concerning housing needs appraisal. There is a massive shortfall between the resources that the Government have made to their council in Sefton and that council's assessment of need.
The Minister and the hon. Member for Hayes and Harlington would regard that authority as a paragon of virtue as it is one of the lowest rated metropolitan districts in the country, it has high rents, a profit on its housing revenue account and does not build many council houses. It asked for £21·83 million for this year's capital programme. Incidentally, the Labour members of the council suggested £35 million to meet its housing needs. The council believes, and says so every year, that if it takes notice of what the Government ask and does as it is told, it will be treated well. Its reward for doing as it was told, after asking for £21·83 million, was a HIP allocation of £6 million, hardly enough to provide the housing manager with pocket money to deal with the environmental problems that my constituents face on their council housing estates, and much less than the Tory authority wanted.
I wish to set my remarks in the context of the housing needs of Sefton, and to refer to the Wates houses in my constituency and how the Conservative council is refusing to implement the Government's Housing Defects Act. I also wish to comment on the building industry in relation to Stockbridge village. I wish to recount the saga of the joint venture scheme — joint venture schemes are supposed to be the answer to everything, according to the Minister for Housing and Construction. This particular scheme is the apple of the Government's eye because the guy running it is none other than Tom Baron who advised the former Secretary of State for the Environment, now Secretary of State for Defence.
Let us look at the HIP bid, the housing needs appraisal produced by the Tory council. I know that these figures are right because of my advice bureaux, the bureaux of

Labour councillors in Sefton and letters that I have received. In the light of the housing needs, £6 million is pitiful. In Sefton, in the private sector there are 9,558 dwellings which are unfit, lacking basic amenities or in need of major renovation. If one adds to that figure the public sector requirement, the total is 13,534. On top of that there are 2,773 difficult-to-let council houses.
There are 6,690 vacant properties according to the assessment of need that the Sefton council has produced. Only 273 of those properties are local authority. Some 6,273 are in the private sector, standing empty and in need of council action to force private owners and private landlords to bring them into use or action by the council or housing associations to acquire them. The council and the housing associations cannot act. They have not sufficient money to deal with the properties should they acquire them, nor have they the money to give out: as improvement grants if landlords or private owners wish to apply for them. All that is due to the Government's moratorium on applications for improvement and repair grants, which is imposed on Sefton and other parts of the country. In terms of mandatory grants, the council is still trying to process the 1982 applications that flooded in when the Government opened the floodgates just before the election and then closed them afterwards.
In Sefton there are 7,30l families on the waitling list. The active waiting list is 4,102 because Sefton hives off 3,199 which it terms as householders—people who rent from a private landlord in inadequate conditions because the council does not have the houses to offer them. That waiting list would vastly increase if there was a possibility of a single person or a family not on top priority being offered a decent house.

Mr. Ashby: Will the hon. Gentleman say what the waiting list was 20 years ago and what it was 10 years ago, and tell us just what his council has been doing in the intervening years?

Mr. Roberts: The council has not done a lot because it has been Tory controlled since local government reorganisation. The council has not even knocked down the unfit housing. It has built 200 to 300 houses a year. Since 1978–79 municipal stock has declined because losses through sales and demolition have been greater than additions through new build completion, according to a statement by the Sefton Conservative council. There has been a decline in houses to rent and a growing waiting list.
The waiting list has gone down, however, as a result of reviewing procedures and restrictions introduced by the Sefton Conservative council after local government reorganisation. However, even if one meets some of the demands and needs, the waiting list is likely to grow to fill the gap, because housing aspirations continue to increase as we provide better accommodation. If that was not true, we would still all be living in caves, and I hope that that process will continue. Even the standards and aspirations of the people of Sefton and the rest of the country of five years ago are not being met in the building programme, and the modernisation and improvement programmes.

Mr. Chris Smith: Will my hon. Friend compare the performance of Sefton with that of the London borough of Islington during the 1970s under a Labour council and with a Labour Government, when the housing waiting list was brought down from 15,000 to 7,000, with many families being well and decently housed by a Labour council?

Mr. Roberts: I am sure that that is true. Many other Labour local authorities have met housing need by building decent low-rise council houses for rent, with gardens.
I refer to the families on the Delacre estate in my constituency who have all bought their Wates houses. They come under the provisions of the Housing Defects Act 1984, but those people cannot sell the houses that they purchased because the building societies are refusing to give mortgages. One building society recently told a constituent of mine who bought a house on that estate that they were built for a short period—they do not have a long life—and that the building society will not accept them for loan or mortgage. The problem is that the council is avoiding its obligations under the Government's Housing Defects Act. In a letter to one of the tenants on that estate, the housing director wrote:
the Council will not be prepared to re-purchase PRC properties, except in accordance with the provisions of the Act.
It is not the council's policy. One cannot argue with that. The housing director then spells out what are not the provisions of the Act:
Flats in PRC buildings have to be re-purchased but, in the case of houses, the main form of assistance will be a Grant to finance repairs and only in specific cases of hardship would consideration be given to re-purchase as a means of assistance.
That is not what the Act says, as Mr. Steven Dumbell, who chairs the residents' group in that area, and the rest of the residents, are well aware. The local authority must give an assurance, and seek assurances from building societies, that those properties will have a future and can be sold on the open market. If they cannot be sold, the local authority has a duty to repurchase. I can understand Sefton trying to get out of its legal obligations because the money to repurchase has to come out of the pitiful £6 million, the pocket money that the Government have given to Sefton and its housing investment programme. It does not have the money to repurchase. But it will have to, and it will have to stand by my tenants, who have a right to require that.
I refer to the building industry and Stockbridge village, the one thing that is held up by the Minister as a wonderful example of joint venture schemes, with public money and the private sector, and the private industry, coming together in partnership to provide houses for sale, converting older council houses or mid-1960s council houses.
Let us look at the saga of that joint venture—it is worth looking at. Stockbridge Village Trust is headed by its main investor, Mr. Tom Baron, who is famous for having advised the former Secretary of State for the Environment, now the Secretary of State for Defence, on the building industry. He is at the centre of the terrible web. What is happening and has happened in Stockbridge village can be described only as the unacceptable face of private sector building. Recently a company was employed by the main contractors, none other than Barratt, which is employed by the Stockbridge Village Trust. That company was JGM Company Ltd., which went into liquidation, and a tin of worms was revealed. The managing director is James Gerard Mansfield. The company was employed over two years ago as one of the main sub-contractors on that development. It was given phase four, a contract for the development of houses that have still not been finished, although the company went into liquidation on 17 June 1985. Having made a mess of that contract, the company was awarded a contract called

"Pot 15" with 120 houses. The snagging on each house has still to be finished, but the company has gone into liquidation.
The saga started at 4.30 pm on 18 February 1985 when the work force withdrew its labour because of threatened redundancies and threats of violence to their members. The threats of violence resulted directly from the work force objecting to the use of lump labour on the site. It was alleged that if trade union officials and other individuals did not leave the site, legs would be broken, and heads kicked in by unknown people. Subsequently, those unknown people told the work force that they had been approached to carry out the threats. The police have been informed, but so far nothing has happened.
After the withdrawal of labour, a series of meetings took place, involving the employer, J. G. Mansfield Company Ltd, Stockbridge Village Trust, headed by the well known Tom Baron, and representatives of the union concerned. A five-point plan was thrashed out and it was agreed to resume work fully on Monday 29 April. It was said that the 714 men employed on the site as lump labour would be offered direct employment, paying class I national insurance, and that if that were not accepted the appropriate unions and the Department of Employment would be notified, which is what the unions wanted in the first place.

Mrs. Edwina Currie: The hon. Gentleman will undoubtedly remember Stockbridge village when it was called Cantrell Farm and was an overspill estate for Liverpool. Did he share with me the experience of visiting it before anybody started to renovate it? It looked as if a bomb had hit it. It had a high level of vacancies, an appalling crime rate, shopkeepers would not even open their shops during shop hours, but kept the shutters down and admitted people when they knocked on the door, and there was no other possible alternative but to raze the 3,500 houses and to send their occupants back to Liverpool where they came from. Would the hon. Gentleman have preferred that solution?

Mr. Roberts: I take it that the hon. Lady is defending the threats of violence and lump labour. If that is how she justifies what is happening, why did she not defend miners who were accused of violence on the picket lines? She should listen to all my allegations before she opens her mouth, and then she should decide whether she wants to defend the builders involved.
The meeting also attempted to resolve other problems. The workers and unions presented themselves for work on the appointed day, but work did not resume because the 714 lump workers continued to operate. Other meetings took place, and an agreement was reached between the employer and the union work force to allow the 714 men to finish the work assigned to them and then to work properly, not as lump workers. Everything seemed to be going well and the work force returned to work, when one worker received telephone threats to his wife and children. The threats were reported to the police and the trade union officials, but still nothing has happened.
On Wednesday 5 June 1985, the maintenance manager on the site, Mr. Alec White, who is a member of the Union of Construction, Allied Trades and Technicians received a message to report to the head office to discuss the work load with the employer. [Interruption.] We are discussing


the building industry because without the right sort of building industry, we cannot build the houses that we want. I am also talking about the abuse of public money.
At the meeting, which began at 1.35 pm, the employer, Mr. James Gerard Mansfield, said:
Come in Alec, sit down. The first thing I want to tell you is that the environmental health have been on the phone and they reported that there is no asbestos involved. How soon can you get off the site?
Mr. Alec White, the UCATT official, replied:
Just me like, or everybody?
Mr. Mansfield replied:
You for starters. I want you off, and I want a new face there by Monday … Think very carefully about going on the sick. I want you off this site.
Mr. White said:
If you want me off, why don't you sack me?
Mr. Mansfield replied
If I sacked you the other crowd would be out the gate again.
Mr. White said:
I don't want nobody out of the gate for me.
Mr. Mansfield then said:
Think very carefully about this. Think of your wife and kids, in case they have an accident. There are people in this city who will do it, and I am in touch with them, and I have the pound notes.
If the hon. Member for Derbyshire, South (Mrs. Currie) wants to defend such violence, she should stand up and defend it.

Mrs. Currie: As you challenged me, will you let me reply?

Mr. Speaker: Order. I did not challenge anybody.

Mrs. Currie: rose—

Mr. Roberts: The hon. Lady has already spoken, and she defended establishment violence, which she obviously supports.
Mr. Mansfield continued:
I want you off first, followed by Terry Mac, followed by Phil Lang, followed by Arthur White, followed by Frank Durham.
They are all trade union officials of either UCATT or the Transport and General Workers Union. Mr James Mansfield, who is employed by the main contractors for the Stockbridge Village Trust, then said that if he sacked the members whom he wanted to sack, he would ensure that they could never work again because he would provide the reasons why they had been sacked to the unemployment office.
Conservative Members may not take those allegations seriously. On Friday 14 June, that company was paid £19,000, and on the following Monday it went into liquidation. Part of that sum was public money, yet the company did not have the courtesy to tell the Stockbridge Village Trust that it was about to go into liquidation, and it has not yet finished the work. That is the unacceptable face of private sector building, which is administered by Mr. Tom Baron, who advised the former Secretary of State for the Environment.
I want answers to some questions. What is the relationship between the trust and that type of builder, and where does lump labour come into the equation? It is important to know that, when both public money and someone who advises the Conservative Government about building is involved. The threats of violence should be investigated. The police should do something about it. Their feet would not touch the ground if they were striking miners or building workers on a picket line. Nor would

Conservative Members defend those threats of violence. The trust should be investigated because it is not publicly accountable.

Mr. Gow: If the hon. Gentleman has genuine grounds for believing that criminal offences have been committed, will he tell the House on which date he gave notice to the police of his belief?

Mr. Roberts: I do not have to do that. The people involved notified the police and came to my advice bureau on Saturday, because they had had no response from the police. I assure the House that J. G. Mansfield has not yet been interviewed, although the police have been informed. That is why I am raising the matter in the House now.
I want to know why the trust and the building firm have the same accountant. I want the Secretary of State for Trade and Industry and the Minister for Housing and Construction to inquire into the circumstances of the liquidation. Is it likely that that group of people will re-emerge as another building firm and be employed with public money elsewhere in Merseyside? The way things are developing that seems likely.
I should like assurances that the Department of Employment will not accept the validity of statements by the company's management about the work force and men who have been sacked or lost their jobs. The accusations are not made lightly. Stockbridge Village Trust receives large sums of public money, and the Government are the first to condemn and the police the first to act against violence on picket lines. I want the Government to condemn the intimidation of working people that brought them in large numbers to my advice bureau to complain.
Do Conservative Members think that it is appropriate for a building company such as Barratts, and a trust headed by Tom Baron to employ lump labour on a massive scale, and to fiddle the system? They are supposed to be in favour of law and order. The hon. Member for Derbyshire, South is a perfect example. Yet she defends people trying to avoid paying national insurance contributions when they are supposed to be operating a reputable building concern.

Mrs. Currie: I am doing no such thing.

Mr. Roberts: If the Minister is really interested in joint venture schemes, he should see what is happening to the Edge lane estate in my constituency, where there are 374 difficult-to-let properties. A proposal by Cruden's to decapitate the maisonettes and sell them as houses and to build some new low-rise housing for rent cannot now go ahead, and the properties remain boarded up because decapitation is classed as an improvement and the imposition of VAT on improvements means that the dwellings could not be sold at a market price. Perhaps the Minister will comment on that aspect of the Government's policy of preventing joint venture schemes by reputable firms such as Cruden's through the imposition of VAT on major development work which the Government and the Inland Revenue laughingly class as improvements.
The Government's policy on joint ventures is being torpedoed by their own actions, their failure to control the building industry and to deal with lump labour and the imposition of VAT which will prevent further schemes from going ahead.

Mr. Jeff Rooker: I congratulate my hon. Friend the Member for Walsall,


North (Mr. Winnick) on winning the ballot and on his choice of subject. Although we have had three debates about capital receipts, a subject central to housing policy, this is the first general debate on housing this Session.
I do not intend to comment on all the speeches in detail, but I am sure that the leader of Knowsley borough council, Councillor Jim Lloyd who serves on the Stockbridge Village Trust and on the management committee, will be most concerned to ensure that the allegations made by my hon. Friend the Member for Bootle (Mr. Roberts) are fully investigated.

Mr. Allan Roberts: Will my hon. Friend give way?

Mr. Rooker: I was not discussing the allegations themselves. I was merely pointing out that Councillor Lloyd will no doubt be the first to insist that they be investigated.
With the exception of certain interventions, I have not disagreed with any of the speeches from either side. The hon. Member for Rutland and Melton (Mr. Latham) put forward positive proposals for improvement grant expenditure which are much to be welcomed and I look forward to debating legislation on building societies later in the year.
The hon. Member for Mid-Norfolk (Mr. Ryder) attacked the solicitors' monopoly and the Government's failure to keep their own promises.
I thought that the hon. Member for Birmingham, Northfield (Mr. King) was starting to tease me a little, but he made a valuable contribution about the massive scale of the housing crisis in Birmingham. My hon. Friend the Member for Walsall, North also touched on that. As I must not deal with constituency matters from the Dispatch Box, I will merely point out that Birmingham has 25,000 unfit dwellings in the public sector and 35,000 in the private sector. Out of a housing stock of 380,000 there are 60,000 unfit dwellings—one dwelling in six, compared with the national average of one in 16. Birmingham and comparable cities clearly need special treatment. There is no blanket solution to the nation's housing crisis, because the situation varies throughout the country. In some areas there is a surplus of housing—it may be rotten housing, but it is in surplus — while in other areas there is a massive shortage of housing to buy or to rent, as the Minister knows from his own constituency.
The public pronouncements of the Building Employers Confederation in the past six or seven months have been vastly more pertinent than in the previous five or six years. A quotation from the confederation will set the background and tone for what I have to say. It has stated:
We face a worsening housing crisis reflecting the fact that we are neither building sufficient new homes nor adequately maintaining existing housing.
No hon. Member could disagree with that, but it remains to be seen whether anything will be done about it. By and large, the Government have no housing policy, just a few slogans. The Minister also has some quite funny speeches, but I hope that today he will respond seriously to the comments of Members on both sides about the breadth, depth and variety of the housing crisis throughout this country in the voluntary sector, the public sector and the private sector.
The Minister will no doubt bring out his home ownership slogan. As home ownership increased

proportionately every year under the Labour Government, there is no argument between us on that. The Minister will no doubt go on to talk about the private sector, but the private sector has told him that, for a variety of reasons, it cannot meet the demand for housing in this country. He will no doubt also boast about the success of the Government's policy on improvement grants, but if it is so successful, why are they about to abandon it?
As this is a short debate, I can mention only a few of the Government's failures since 1979. First, they should be thoroughly ashamed of the fact that mortgage rates are on average 50 per cent. higher than they were under the Labour Government. No one expected that to happen under the Conservatives. A mortgage rate which is twice the rate of inflation imposes a crippling burden on millions of people.
Millions of viewers saw the stark effects of that in the "Panorama" programme on television a week ago. Why should families paying off long-term mortgages become the victims of short-term changes brought about by big-time money speculators? When the interest rate casino started up in the mid-1970s, the Labour Government set up a building societies mortgage interest stabilisation fund at no cost to public funds. That system worked quite satisfactorily, but the Conservatives have made no attempt at all to deal with the problem. Of course there is no magic formula but the Labour Government proved that some short-term assistance could be given.
The Government's failure with regard to land prices has already been mentioned. They have allowed the price of building land for housing to rise by 1,000 per cent. in seven years and by even more in some areas. Under the Conservatives we have had south American inflation rates in the price of building land, finishing off the building industry in many parts of the country, especially the home counties. The deliberate restrictions placed on building land for new homes in areas where people want or need to live has sent the price of building plots through the roof. How can the private sector fulfil the Government's policy to take over virtually all land for housing and build houses within the reach of first-time buyers when a plot of land costs between £20,000 and £30,000?
In many parts of the country, such as Berkshire, Hertfordshire, Suffolk and Warwickshire, cuts in building land of between 20 and 30 per cent. from structure plans are deliberately designed to force up the price of such land. Indeed, they are deliberately designed to prevent people from moving into such areas. They are designed deliberately to stop the building of houses—a subject on which many Conservative Members have campaigned in recent months. They do not want new housing in their constituencies. In fact, this cut amounts to a tax on housing.
The Minister only recently met the House-Builders Federation. Following that meeting, Mr. Humber said last week:
We can only fill the gap if we have land at reasonable prices. The party of home ownership at Downing Street is not the party of home ownership when you go into the shire counties".
What is the Government's response to a situation about which they alone can do something? The federation also said:
in terms of delivering owner occupation to people who want it, at prices they can afford, and who expect this Government to help them, the Government's record—and that of its shire county supporters who are the real culprits—is appalling".


The House-Builders Federation and, indeed, the Building Employers Confederation are not exactly known for stuffing the coffers of the Labour party at election time. Those gentlemen and their industries are the paymasters of the Tory party. They believe that under this Government it is their duty to carry out housing policy, but they cannot do so because of the other policies which the Government have imposed on the nation.
The third area of failure, in addition to the massive increase in mortgage rates and land prices, relates to the number of new dwellings. No one will argue that there is no longer a need to build new dwellings, even though we may argue about the part of the country in which they are built and the kind and size of dwellings to meet the mix in the population. By the year 2000, the population will increase by only 4 per cent. The Government recently told us that by the same date the number of households will have increased by 14 per cent. We therefore know that there will be a massive mismatch of population to households, even in the few short years to the end of the century.
Had the Government continued the average new home-build programme of the last Labour Government, there would today be more than 500,000 new homes than exist. The last Labour Government's average build programme was 285,000 dwellings a year for five years. The average new build programme under the Tory Government in their first five years was 180,000 dwellings a year—more than 100,000 fewer. Put another way, for every week that the Prime Minister has been in Downing street, 2,000 fewer new homes have been started than under the last Labour Government.
The Labour party has nothing whatever to apologise for, although we are the first to admit that we did not build enough homes. We have nothing to be defensive about. The 500,000 homes that have been lost represent 1·5 million taps. I bet that the tap manufacturers would have liked to see their factories churning out those taps. Those houses also represent at least 1 million front and back doors, which the woodworking factories would like to have made. They represent at least 10,000 million bricks, which could have been manufactured by British workers to be used in homes for British people. That has not been possible simply because of the cutback in the Government's building programme.
In its leader column a few weeks ago, when it referred to taking comfort from the Prime Minister's statements, the Building Trades Journal said:
The next election would be upon us and who is to say which way the voting will go. Another dose of this type of Tory administration would be disastrous for the industry and the Government needs firmly discouraging now from keeping on its present course".
That is the weekly vehicle of the builders and building material producers, who have suffered catastrophic business failures in the last five or six years.
My hon. Friend the Member for Walsall, North referred to international comparisons. Why should we be different from France or Germany? Their populations are roughly the same, and the wealth of those nations is not that dissimilar from our own. Indeed, the economic capacity of the three countries is about the same. France and Germany are our economic competitors. Why do they invest three times as much of their gross national product in residential building as we do? What difference causes that to happen? Why do they think it worth while to invest

in residential building, whereas the United Kingdom Government do not? I doubt whether those issues will be raised at the European summits, but perhaps the Minister can explain the reasons for this trend over the past few years.
The repairs crisis has been well documented by many of my hon. Friends, and reference has been made to the Government's forthcoming attempt to change the system of measuring unfit housing. Do the Government intend to change the fitness standards in the next house condition survey? We must be able to measure the fitness of housing in 1986 on the same basis as in 1981. Come the end of this month, when the inquiry into British housing—which to its credit has been sponsored by the National Federation of Housing Associations—reports, the Government will not be able to get out of the corner.
On the evidence available, it is possible for only one kind of report to be written, and the Minister knows it. He will not be able to flannel over dinner with members of the inquiry team on the day that the report is published. They and the country will want firm Government decisions on what has emerged in report after report from all sectors of society right across the political spectrum, because the housing crisis can no longer be ignored.
We now face problems arising from the junk housing forced on local authorities by Governments of both persuasions in the 1950s and 1960s—no one denies that —but we must show the British people that Parliament has learnt from its mistakes. We shall no longer be able, simply by fiddling the subsidy arrangements, to force local authorities to build junk jungles in which people will be forced to live, be they vast estates that are so anonymous as to be unbelievable or tower blocks in the sky. Both parties are to blame, but this Government have not yet had the courage to say, "Yes, we made a mistake. We admit it. We shall learn from it and do something about it."
We will not allow the Biiminghams of this world to pay out of their own resources, because the 429 tower blocks in Birmingham have been surveyed and all have been found to be in serious need of repair. We will not allow the Manchesters of this world to cope on their own, because they are saddled with vast numbers of deck access housing. We will not allow them to count as housing investment the dismantling of the Bison deck access fiats to see whether they were put together properly.
The Minister still refuses to give Newham council financial approval to dismantle Ronan Point, winch I visited a few days ago to see how that tower block was put together. Why should Newham council have to pay housing investment money to dismantle Ronan Point? Surely the Government cart make a special dispensation for that tower block, whose name will haunt housing policy, architects and planners for years to come.
Local authorities alone cannot cope with these problems. Given their inadequate resources, they are not able to help the thousands of people who are trapped in junk high-rise housing in which they are forced to live. Local authorities are unable to get people out of unfit owner-occupied housing, simply because the Government refuse to accept their responsibility.
It is no good the Minister saying, "You own your own house. We have created a policy which forces you to do this because we have cut back on the building of houses for rent." The Minister knows full well that there is a massive need for houses to rent. His own local council told him so in its housing investment statement last year.
There is a massive need for housing both for those who want to buy and for those who want to rent, at a price which they can afford. There can be no freedom of choice between tenures if there is a deliberate Government policy to deny people the opportunity to have one sort of tenure of housing, and so force them into the other. That leads to the examples that we saw on "Panorama" last week. Real choice of freedom means what it says—a genuine choice of available housing. The Government's dogmatic approach of virtually refusing to countenance any building for rent must change.
We want building for sale to continue. We want housebuilders to improve their record levels of building for sale, but we also want people to have a choice to rent if they wish. That should be their decision. It should not be a decision of the Government or of the local authority. However, the decision whether people have the choice is the Government's. They should make resources available to the voluntary sector and to local authorities, and should change the rules and regulations for land planning, so that housebuilders can go back into the market to build for first-time buyers. Nobody will convince me or the housebuilders that the Government's policies are designed to allow them to build for first-time buyers. The Government know that that is not the case, so a change in Government policy is called for.
Often in the past the Opposition have been accused of being irresponsible because, it was said, we made demands which were based on a bottomless pit and the money was not available. This is one of the wealthiest countries in the world—let no one deny that—but we misuse our wealth. The Audit Commission was set up by the Government, but only a few days ago it said that to tackle seriously the scope and size of our housing crisis no less than £50,000 million was required. That makes the Building Employers Confederation demand for £30,000 million to tackle the housing crisis look extremely modest. I ask the Minister to split the difference and get on with the job.

The Minister for Housing and Construction (Mr. Ian Gow): The debate was diminished by the contribution made by the hon. Member for Bootle (Mr. Roberts). I do not think that he will be anxious to repeat outside some of the things that he said within the privilege of the House. I completely reject any criticism that he has made of Mr. Tom Baron, who has made a remarkable contribution to the success of the Stockbridge Village Trust, a success that is greatly appreciated by those who really matter—those who have lived and will live at Stockbridge. I hope that the hon. Gentleman will do the decent thing and withdraw any allegation against Mr. Baron.

Mr. Allan Roberts: In the light of that, will the Minister ask Mr. Tom Baron to have an inquiry into the employment of lump labour at the Stockbridge village site?

Mr. Gow: I shall study carefully, when I receive the Official Report tomorrow, the allegations that the hon. Gentleman has made. It goes without saying that if there is anything in his speech that, upon examination, requires investigation, most emphatically that inquiry will be carried out.
My hon. Friend the Member for Rutland and Melton (Mr. Latham) made a characteristically thoughtful speech. In our new Green Paper, our proposals on improvement grant eligibility are out for consultation. No decision has yet been made about who will be eligible for grants under the new scheme. On page 7, we said:
The overriding aim will be to ensure that as far as possible the system includes those who are unable to afford the necessary improvement and repair work unaided, and excludes those who do not need help.
The hon. Member for Newcastle upon Tyne, North (Mr. Brown) referred properly to the problems of the city that he has represented in the House for so long. He knows that I have visited Newcastle to see some of the problems there for myself.
My hon. Friend the Member for Mid-Norfolk (Mr. Ryder) made an interesting speech about my profession of the law. I shall draw his speech to the attention of my noble and learned Friend the Lord Chancellor.
My hon. Friend the Member for Birmingham, Northfield (Mr. King) knows that I have visited his constituency to see the Smith houses there. He referred to possible new evidence that might assist in reaching the decision, so far denied, to include Smith houses under the category of houses designated under the Housing Defects Act 1984. If he has any further fresh evidence that I have not yet considered, although I believe that I have considered it all, I undertake to look at it. My hon. Friend also referred to the possibility of a transferable voucher system. He will know that he has been anticipated already by the Government, in that there is a transferable discount scheme in operation for tenants of charitable housing associations who were denied the right to buy under the Housing and Building Control Act 1984.
I congratulate the hon. Member for Walsall, North (Mr. Winnick), as did the hon. Member for Birmingham, Perry Barr (Mr. Rooker), on having won first place in the ballot and chosen the subject of housing. Housing as a subject should be debated more often in the House, and I hope that it will be. However, my congratulations stop there. The hon. Gentleman made a characteristically intemperate speech matched by an equally characteristic modesty, which he showed when drafting his general election address, of which, for the sake of accuracy, I have a copy. He drafted his eulogy with loving care. He said that he was
One of the most hard-working and dedicated of MPs,".
That is "Winnick on Winnick", but it is not much of a tribute to his parliamentary colleagues.
I note, in passing, that the then candidate for Walsall, North offered a typical bribe to the electors. While the then Shadow Secretary of State for the Environment, the right hon. Member for Manchester, Gorton (Mr. Kaufman), said in his election address that the Labour party would freeze council house rents for one year, there was no similar time limit given by the chairman of the Tribune group in his election address. He simply promised
to freeze council house rents".
The hon. Gentleman's election address was calculated to mislead, and so is his motion today. An honest motion on housing would have been in the following terms:
That this House notes that local authority capital expenditure on housing was cut by 50 per cent. in real terms between 1974–75 and 1978–79"—
[HON. MEMBERS: "Ah!"] Yes, that would have been the truthful motion. Such a motion would have continued:
congratulates the Government on the success of its housing policies since May 1979 in providing the great majority of the British people with better housing than at any time in our history;


on giving to most public sector tenants the right to buy their home and introducing the tenants charter; on the provision of 1¼ million new houses and flats; on increasing the number of home owners by nearly 2 million; on substantially higher public expenditure on improvements and repairs and welcomes further initiatives"—
which I hope, if I get to the end of my speech, I shall be able to announce—
to combat homelessness.
Since May 1979, 1·25 million new homes have been built in Britain. Since May 1979, more than 850,000 houses and flats have been sold by local authorities, new towns and housing associations. More than 775,000 of those sales were to sitting tenants. Sales are still running at well over 100,000 a year. Since May 1979, the number of owner-occupiers has increased by nearly 2 million. In England, 63 per cent. of our housing is now owner-occupied. Over these past six years, we have seen the most rapid increase in home ownership in any period of our history, and the extension of home ownership reflects the preferred choice of the overwhelming majority of the British people.
The increase in home ownership has not happened by accident. It has come about as the direct result of the policies of Her Majesty's Government. There is no need to remind you, Mr. Speaker, but I shall go on reminding the Opposition that they opposed with such vigour as they could muster the right to buy when introduced originally in the Housing Act 1980 and when extended in the Housing and Building Control Act 1984. You will remember, too, Mr. Speaker, that the Labour party fought and lost the last election on the policy of repealing the right to buy.
Those Opposition Members who sit below the Gangway, and many of those who sit above it, will never understand that home ownership is a legitimate aspiration for those who live on council estates. The improbable figure of the hon. Member for Perry Barr, motivated as much by electoral expediency as by principle, trying to rid the Labour party of the electoral albatross which it hung round its own neck last time is not edifying.

Mr. Winnick: Will the hon. Gentleman give way?

Mr. Gow: No. Only a short time remains before the end of the debate.
Just as the hon. Member for Perry Barr was beginning to congratulate himself on the faltering progress that he was making, along came the hon. Member for Oldham, West (Mr. Meacher), without even a whisper in his hon. Friend's ear, and said that if ever his party sat on the Treasury Bench, mortgage tax relief would be knocked on the head.

Mr. Meacher: That is not true.

Mr. Gow: "Knocked on the head" is my paraphrase of what was said in the document—[Interruption.] No, the hon. Gentleman did not use the phrase. That is my paraphrase of what the hon. Member for Oldham, West said.
Meanwhile, the House and the 4·5 million-plus local authority tenants who have not yet bought their homes await with mounting impatience to see what housing policy will emerge.

Mr. Winnick: Will the hon. Gentleman give way?

Mr. Gow: No. I have already told the hon. Gentleman that I have only a short time in which to complete my speech, and it will take some time to extol the virtues of this Government's housing policy.
Meanwhile those who have not yet bought their homes —the 4·5 million still living in council accommodation —wait with mounting impatience to see what housing policy will emerge as the struggle between the chairman of the Tribune group, the hon. Member for Perry Bar, and the hon. Member for Oldham, West proceeds.
The hon. Member for Walsall, North referred to the 1981 English house condition survey. That showed that in the preceding decade the number of houses without an inside loo had fallen from one in eight to one in 33 and that the number of houses without a bath had fallen from one in 10 to one in 40.
In the four years since the 1981 survey, 647,000 improvement and repair grants have been given, totalling more than £2·25 billion. In the last four years of the Labour Government, when the condition of our housing stock was worse, the total number of grants was only 261,000, amounting to £290 million. Last year, 229,000 improvement and repair grants were made, the highest number ever given and 300 per cent. more than during the last full year that the Labour party was in power. For the financial year 1984–85, £725 million was spent on grants compared with £90 million in the last year of the Labour Government.
In the last five years of Tory Government, more than 280,000 repair grants have been paid. In the last five years of the Labour Government, 838 grants were paid. For every grant paid under compassionate Labour, 334 have been paid under the flint-faced Tories. Those hon. Members who have spoken from the Opposition Benches would have been more honest with the House if they had acknowledged those truths.
We have not had a contribution from any hon. Member representing a Welsh constituency, but I give some figures about Wales. Between 1975 and 1979, only 500 repair grants were given throughout the Principality. Between 1981 and 1984, while my right hon. Friend the Member for Pembroke (Mr. Edwards) has been Secretary of State, 43,000 grants have been paid. For every grant given by the compassionate Labour party, 86 have been given by the flint-faced Tories.
The same general pattern appears if one takes a specific example. I have selected at random the Brecon and Radnor district councils. In the five years between 1975 and 1979, when for some of the time the highly principled members of the parliamentary Liberal party were sustaining in office the most illiberal Government of modern times, not a single repair grant was given in Brecon or Radnor.

Mr. Simon Hughes: rose—

Mr. Gow: I shall give way to the official spokesman for the Liberal party so that he can say what representations for grants were made under the terms of that squalid arrangement, the Lib-Lab pact, which, to be fair to the hon. Member for Southwark and Bermondsey (Mr. Hughes), was made before he arrived in the House.

Mr. Hughes: Perhaps the. Minister will give the House one other fact— [HON. MEMBERS: "Answer."] I shall answer his question in a moment. I always answer questions.

Mr. Edward Leigh: The alliance is running third in Brecon and Radnor now.

Mr. Hughes: No. We are second. Will the Minister say who was in charge of the local authorities in Brecon and Radnor during the period in question? We ought to be told that.
The answer to the Minister's question is that the Labour Government, with Liberal support, did more for small firms, including the appointment of a Minister. Among those to benefit was the building industry, and that produced—

Mr. Speaker: Order. This debate is about housing.

Mr. Gow: I was wrong to give way to the hon. Member for Southwark and Bermondsey.
Since 1979, despite assertions to the contrary, local authority capital expenditure on public sector repair and renovation has increased substantially and is now running at more than £1 billion a year. In addition, local authorities are spending another £1 billion a year out of revenue on repairs and maintenance. In 1984, 87,000 local authority and new town dwellings were renovated — a higher figure than in any year since 1973 when my right hon. and learned Friend the Member for Hexham (Mr. Rippon) was Secretary of State. That trend is continuing. In the first quarter of 1985, there were 32,000 renovations, compared with 21,700 in the same quarter of 1984. Since my right hon. Friend the Prime Minister arrived in Downing street, 450,000 local authority-owned dwellings have been renovated.
Of course, I share the concern expressed by hon. Members on both sides of the House about the condition of our PRC houses and some of the large panel blocks. In April this year, I asked all housing authorities to provide details of the condition of the houses and flats which they owned. I have now received replies from more than 90 per cent. of the authorities, and those replies are being analysed. The conclusions from those studies will be available before we take our decisions about local authorities' housing investment programme allocations for next year.
I have visited public sector housing, as it is my duty to do, in every part of England. I have seen how great is the contrast between the best and the worst managed housing estates. Insensitive, unimaginative and bureaucratic management, when replaced by that which is sensitive, imaginative and efficient, can literally transform the lives of tenants.
Our priority estates programme which we set up with local authorities five years ago has shown what can be achieved. Locally based management, proper consultations with tenants, improvements in security and dealing with the backlog of repairs are the essential ingredients. Many authorities now have PEP schemes. I hope that others with problem estates will join them.
Of course, the House ought to be, and is, concerned with those who today live in unsatisfactory housing conditions, but the truth remains—and in this truth we are entitled to take some pride—that the great majority of the British people are better housed today than ever before. The Government are determined that that progress shall continue.

It being Seven o'clock, proceedings thereon lapsed, pursuant to Standing Order No. 6 (Arrangement of public business).

Orders of the Day — European Communities (Finance) Bill

Considered in Committee.

[SIR PAUL DEAN in the Chair]

7 pm

Mr. Nicholas Budgen: On a point of order, Sir Paul. I beg to move, That the Chairman do report Progress and ask leave to sit again.
I ask you to take that unusual step because we read in the newspapers today that there was an unsuccessful meeting of the Council of Ministers in Milan at the weekend and as yet the Prime Minister has been unable to report on the matter to the House of Commons.
You will appreciate, I am sure, that the concern of many hon. Members from all parts of the Committee is that the expenditure of the EEC may continue unchecked. We read that there has been a dispute about the areas that might be controlled by majority decision within the Council of Ministers. If that system of majority decision is extended to activities that cost money, the Government's asessment of the future requirements for money for the EEC might turn out to be wrong.
It may be that my right hon. Friend the Prime Minister will be abe to calm all fears and to say clearly that she has no intention of allowing majority voting over any EEC activity that costs money, and it may be that she will also give us clearly to understand that the passage in the communiqué on Fontainebleau to the effect that own resources may be increased to 1·6 per cent. by 1 January 1988 has no effect in her mind and that she has no intention of allowing such increase, but it would be wrong if the Committee were to proceed to discuss the details, for instance, of the 1986 EEC budget without knowing what had been agreed last weekend at Milan and without knowing what the Government's position is.
I am sure that my right hon. Friend the Prime Minister wants to come to tell the House about this. Far and away the best procedure would be to give her the opportunity to come immediately, if she wishes, or otherwise to adjourn consideration of the Bill until such time as she is able to come. To proceed to discuss the details of this important Bill—described by my right hon. and learned Friend the Foreign Secretary as one of the most important matters that we have had to deal with in recent times — without understanding the Government's position in relation to the Heads of Government of our fellow member states of the EEC is to proceed on a quicksand. We simply do not know where the finances of the EEC—

The Second Deputy Chairman of Ways and Means (Sir Paul Dean): Order. I am listening carefully to the hon. Gentleman, but he is now developing arguments which he would use were I to grant the motion. I think that I have got the drift of his argument. Perhaps he can bring his point of order to a conclusion.

Mr. Budgen: I am grateful, Sir Paul. I ask only that we may be allowed to debate the motion that I put to you. Since I believe that there will be concern in all parts of the Committee that we should proceed on a proper basis, I


hope that you will be able to allow a short debate on the issue so that the mood of the Committee may be made known.

Several Hon. Members: rose—

The Second Deputy Chairman: Order. I am dealing with the personal application of the hon. Member for Wolverhampton, South-West (Mr. Budgen). As the hon. Gentleman said, and as the Committee will realise, we have made no progress yet in the Committee proceedings. Amendments have been selected and it is the job of the Committee to get on with the business, so I am not prepared to accept the hon. Gentleman's motion.

Several Hon. Members: rose—

The Second Deputy Chairman: Order. I have given my ruling. I am not prepared to accept further points of order on this matter. The first amendment to be considered is No. 5.

Mr. Peter Shore: On a separate point of order, Sir Paul. Considerable concern was expressed in the House earlier today that there has been no statement arising out of the Milan summit. I share the concern of hon. Members on both sides of the Committee that we should proceed with this Bill without a statement on the Milan summit. My point of order relates to the request that a statement be made. It will take only a few moments to deploy the argument.
The Bill seeks to give legal force to a Community treaty. It is a Community treaty that deals with the most sensitive point of all the Community's affairs, that is, the financing of the Community itself. It is 15 years since the Community last had a treaty defining its own resources. We are now for the first time, as it were, seeking to change that agreement in a way that will give greater possibilities for the financing of the Community in future.
The relevance of Milan to this, and the reason why I believe we should have a statement now, is that at Milan what was discussed to our surprise was a further treaty. Apparently a discussion took place and as a result of a majority vote it was agreed that a conference should be held at which the object would be to draft a new treaty to carry forward the affairs of the Community. It is inconceivable that any new treaty would fail to make provision for the financing of the Community. I therefore think it would be right to have a statement.

The Second Deputy Chairman: Order. The right hon. Gentleman will realise that we are now in Committee. This is not a matter over which I have any control. I notice that the Leader of the House is here, and he has no doubt heard what has been said. The right hon. Member for Bethnal Green and Stepney (Mr. Shore) will know from his long experience in this place of the way in which to try to get a statement in due course.

Mr. Teddy Taylor: On a further point of order, Sir Paul. The first amendment that you have kindly said you will consider is amendment No. 5, which deals with document COM (85)36, which unfortunately became available only at about 12 noon. I have studied it and it deals with the division between allocated and unallocated expenditure. Two decisions at Milan yesterday that had nothing to do with European union made alterations in what is regarded as allocated and unallocated expenditure. In particular, in relation to a decision on aid it was revealed that unfortunately less than

half of the aid allocated to Ethiopia had been delivered. In those circumstances it is impossible for us to consider amendment No. 5 until we know the text of what was agreed at Milan on allocated and unallocated expenditure, otherwise the amendment will be discussed in the dark.

The Second Deputy Chairman: I am grateful to the hon. Gentleman, because he is helping the Committee to make progress. These are precisely the sorts of points that it will be in order for him to make when we come, as we are now doing, to amendment No. 5.

Mr. Nigel Spearing: Further to the point of order, Sir Paul. On a point of elucidation concerning Standing Orders Nos. 28 and 29, you have made a ruling that we must proceed and said that you will not accept a motion to report progress. The two groups of amendments to which we shall proceed involve two questions — first, the inclusion of a document and, secondly, a percentage. The third Question that you will put to hon. Members is that clause 1 stand part of the Bill.
Because of the brevity of the Bill, the Question that clause 1 stand part has to do with the principle of the Bill which was discussed last week in relation to the EEC's scope, treaties, purposes and direction as were then extant. We all know that since then conversations have taken place in Milan. It is almost certain that another conference will be held relating to future treaties.
I take it, Sir Paul, that the changed circumstances will be borne in mind in deciding whether to accept a motion to report progress. Given the scope of the Question that clause 1 stand part, a different case might have to be considered. Will you accept representations at that time from hon. Members to move a motion to report progress?

The Second Deputy Chairman: I think that the hon. Member will recognise that the Chair cannot possibly anticipate. There are two groups of amendments to clause 1 and, until we have dealt with them, it is not possible to say whether a debate on the Question that clause 1 stand part would be appropriate or whether the motion to which the hon. Member referred would be acceptable. I am sure that the hon. Member realises that that matter must be judged when we reach that stage.

Mr. Jonathan Aitken: Further to the point of order, Sir Paul, which the right hon. Member for Bethnal Green and Stepney (Mr. Shore) raised. Back Benchers look to the Chair to protect their rights. I suggest that the rights on which basis the Bill was introduced have been dramatically changed by events in Milan. The Milan summit was not just a mad hatter's tea party of discord and disunity that one can criticise from afar. Last week, the Bill was presented to the House on one basis, which has now changed. The House and the country have been sold the Bill on a false prospectus of many types of reform, especially budgetary reform. Suddenly, there was complete chaos and disunity which not merely changed the rules but removed the playing field and the goal posts. The idea is that hon. Members will proceed to discuss the Committee stage although a completely new treaty and two tiers are seriously envisaged. In addition, many documents appear to have been circulated in press releases —for example, guaranteeing that Britain will vote in the United Nations in unity with her European partners. Not a word about this was disclosed in advance to the House of Commons and no document was placed in the Library.
The House of Commons and the country have been treated in a cavalier fashion. This fact has emerged because of the chaos at the Milan summit. The Chair should protect the rights of Back Benchers who feel strongly about this matter and should suggest that the Whips get together and agree to report progress as soon as possible.

The Second Deputy Chairman: I understand the hon. Member's point. I am sure that he recognises that I have no power to force a Minister to make a statement. Many of the hon. Member's arguments might well be relevant to the amendment that we are about to discuss.

Mr. Tony Marlow: Further to the point of order, Sir Paul. You say that you do not have the power to compel a Minister to make a statement. We understand that and appreciate your difficulties. However, you have the power to allow hon. Members to debate for a short period whether to report progress. If progress were reported, it would allow a Minister—

The Second Deputy Chairman: Order. I have already given a ruling on that matter. I have clearly said that I am not prepared to accept such a motion. I am not prepared to have arguments about that.

Mr. Ron Leighton: Further to the point of order, Sir Paul. I wonder whether you can help me and many other hon. Members. I think we have a case of Hamlet without the prince. We are asked to vote hundreds of millions of pounds. We are asked to throw money at a problem, but we are not sure what the problem is. The problem is moving. Where must we throw the money? We are not sure. We have read in the newspapers about the Milan conference and the humiliation suffered and snubs received by the Prime Minister. We do not know what the Government's policy towards the Common Market is. I understand—the Leader of the House might be able to help us — that tomorrow we may hear officially about the Government's policy on this problem at which we are asked to throw money. As you know, Sir Paul, our main leverage is our ability to decide whether to vote money. Why vote the money before we have heard the Government's approach?
The Prime Minister may not be available, but the Leader of the House certainly is. He understands these matters better than most. Perhaps he could advise us whether we should proceed this evening to vote more money for something to which the Government might not want to give more money. Perhaps you could help the Committee, Sir Paul, in explaining how we should proceed.

Mr. Ian Mikardo: Further to the point of order, Sir Paul. I appreciate that you have said that you have given a ruling. In the light of the observations during the past few minutes by hon. Members on both sides of the Chamber, would you be kind enough to give further thought to your ruling? It is absolutely clear that, if we proceed to deal with the Committee stage now, we shall be groping in the dark—[Interruption.] We shall blunder about. Like a number of people in a dark room, we shall be groping around and, unless we are careful, we shall fall over things. I understand that it is possible that during the next 24 hours light will be shed on these

proceedings. If so, would it not make sense for us to delay the consideration of the Committee stage until that light breaks in upon us?

The Second Deputy Chairman: I appreciate the hon. Member's point, but this is not the first time that a Committee has been groping in the dark. It may well be that, if we proceed with the debate and many of these points are raised, we shall see some light where, apparently, there is now darkness. I hope that we shall now continue with the debate.

Mr. Budgen: May I suggest a compromise, Sir Paul? The Committee hopes that my right hon. Friend and hon. Friends on the Government Front Bench will be able to give us the information that we seek. We expect to have a full and informative debate. If, by chance, they do not find it possible to give us the information for which we ask, will you, Sir Paul, help the Committee by giving us some hope that it may be possible to accept the motion to adjourn these proceedings if the mood of the Committee is that it is not yet fully informed? Of course, we hope that over the next hour or so it will be possible for the Committee to be fully informed by my right hon. and hon. Friends, but if, sadly, they fail in that important endeavour, perhaps you would allow this motion to be considered again, Sir Paul.

The Second Deputy Chairman: The Committee has had a good run on these points of order. At appropriate moments, the Chair will always be ready to reconsider these matters. I suggest to the Committee that we begin the debate, see how we go, and see what enlightenment is spread on the issues that we are supposed to be debating.

Mr. Andrew F. Bennett: As I understand it, Sir Paul, the Chair has a responsibility to certify that any Bill presented to the Committee does not infringe any of the privileges of the House of Commons or the procedures that the Bill has to undergo. In order to do that, the Chair must be satisfied that the Bill is correctly printed. Has the Chair considered that the money resolution as printed would appear to have been in order when the Bill was first presented, but the circumstances of the weekend suggest that it is not now correct? Therefore, there might be some doubt about whether the privileges and rights of the House of Commons are in danger because of the weekend's developments. Will you assure us, Sir Paul, that the Chair has had the opportunity to study the Bill, obviously on the basis of information that we do not have at this stage, to ensure that the money resolution is correct and does not infringe any of the rights of the House of Commons?

The Second Deputy Chairman: The amendments are in order or they would not have been selected. We should now proceed with the debate.

Mr. Alan Williams: On a point of order, Sir Paul. If we allow this debate to progress to clause stand part, we shall have precluded the possibility of moving amendments which might prove to be relevant when we know the nature of the statement to be made by the Prime Minister. We are not capable of judging that at present. If we follow the course that you recommend, Sir Paul, which I accept would normally be the sensible one, it would mean that because of the nature of the Bill, which has one clause, the Committee will have missed the opportunity to table amendments to the clause in the light


of the Prime Minister's statement. For that reason, I suggest that we are in a unique position and that an early decision is needed on whether we should progress with the Bill.

The Second Deputy Chairman: If that point were to arise, it would be open to the Committee, when it reaches the debate on the Question, That clause 1 stand part of the Bill, to reject the clause. There are many possibilities open to the Committee. I have already said that we should now proceed with the debate. The Chair is prepared to keep an open mind about a dilatory motion later, but I cannot commit the Chair at this stage. The Committee has work to do and we should proceed with it.

Mr. Dennis Skinner: On a point of order, Sir Paul. Would you consider what the position would be if we were able to adjourn these proceedings to allow the Prime Minister to make a statement? It has crossed the minds of several of my hon. Friends that if the Prime Minister can find time to gallivant round the world spending £2·5 million of taxpayers' money — that is what it cost between 1979 and March this year—she has a duty to explain to the House of Commons what happened at the weekend in Milan. You will have noticed, Sir Paul, that the Common Market representatives decided in Milan that the best way to proceed was to adjourn the proceedings there and then and to have a conference. If it is all right for the Common Market to spend all that money bringing over all the Heads of Governments and to push up the value added tax contribution to 1·4 per cent. and then to spend much more organising a conference, surely it is not asking too much to say, through you, Sir Paul, "What is good for them is good for us, and we shall not expend any more money." It could be argued that if we were to delay the enactment of the Bill — well, temporarily shelve it — we would be saving money instead of spending it. I believe that the issue should be dealt with after the Prime Minister has been brought to the House to make a statement.

The Second Deputy Chairman: The hon. Gentleman knows that I have already dealt with that point. We must now proceed with the amendments. I call Mr. George Robertson to move amendment No. 5.

Mr. George Robertson: rose—

Mr. Marlow: Further to the point of order, Sir Paul. It follows on from the point of order that was raised by the right hon. Member for Swansea, West (Mr. Williams).

Mr. Andrew F. Bennett: Further to that point of order, Sir Paul.

The Second Deputy Chairman: Order. I have dealt with many points of order. I dealt earlier with all the points which have been raised recently. The raising of these points of order is becoming an abuse of the Committee's time. The Committee has work to do, and we must get on with it. I call Mr. George Robertson to move amendment No. 5.

Mr. George Robertson: rose—

Mr. Marlow: Further to that point of order, Sir Paul.

Mr. Andrew F. Bennett: On a point of order, Sir Paul.

The Second Deputy Chairman: Order. I have already explained to the Committee that I am not prepared to take further points of order. The Committee has had a good run

on points of order and I have done my best to answer all those that have been raised. Furthermore, I have said that the Chair will always be prepared to consider matters when it can see how the Committee has proceeded. We must now proceed, and I call Mr. George Robertson to move amendment No. 5.

Mr. Andrew F. Bennett: On a point of order, Sir Paul.

Mr. George Robertson: I beg to move—

The Second Deputy Chairman: Order. Does the hon. Member for Denton and Reddish (Mr. Bennett) have a point of order to raise which I have not dealt with so far? Is it a different point of order?

Mr. Andrew F. Bennett: Yes, Sir Paul. I asked for an assurance from you, Sir Paul, that the money resolution was correctly printed. When you replied to that point of order, you said that you considered the amendments to be in order. I ask for an assurance, Sir Paul, that the money resolution is absolutely correct as printed and that the Committee is not being misled as a result of the events of the weekend.

The Second Deputy Chairman: The answer to the hon. Gentleman's point of order is yes. It is a wide money resolution, which covers the Bill and the amendments. I call Mr. George Robertson to move amendment No. 5.

Clause 1

EXTENDED MEANING OF "THE TREATIES" AND "THE COMMUNITY TREATIES"

Mr. George Robertson: I beg to move amendment No. 5, in page 1, line 9, after 'resources', insert
'and related communication COM (85)36'.
Earlier in our proceedings, Sir Paul, you said that some light may be cast upon the events that have already been debated in the ensuing debate on the amendments. However, it will be obvious to members of the Committee that among the Ministers on the Government Front Bench is the Minister of State, Foreign and Commonwealth Office, the hon. Member for Edinburgh, Pentlands (Mr. Rifkind). Opening the debate on the European Community on 20 June, the hon. Gentleman said:
The Government, and a substantial number of other member Governments do not see any necessity for an intergovernmental conference such as is proposed."—[Official Report, 20 June 1985; Vol. 81, c. 475.]
If the Minister had that degree of perception about the possible outcome of the Milan summit, it is unlikely that he, above all others, will be able to enlighten us this evening on the dramatic turn of events that took place at the Heads of Government summit.
This technical amendment would add to clause 1 a provision showing the calculation of the abatement which is now on offer to the United Kingdom and which was agreed at the Fontainebleau summit. As the earlier remarks concluded, the abatement is at the heart of the Fontainebleau agreement. Without an abatement agreement there would have been no chorusing from the Government about the great success and triumph that Fontainebleau represented for Britain.
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Fontainebleau was designed to be a permanent arrangement. The Economic Secretary to the Treasury went into print in The Times last week, saying that


Fontainebleau had changed the rules for ever. Yet the events of last weekend clearly show that in Common Market language, permanency is confined to the last speech that was made rather than to the next speech.
As we are considering the permanence of the United Kingdom's abatement, we cannot ignore events that took place in Milan. Only a week ago Ministers were telling the House that Milan was to be dominated by proposals put forward by the United Kingdom. We were told in a headline in The Observer:
Britain basks in the EEC's spotlight.
The Sunday Times declared:
Sir Geoffrey Howe tried to pre-empt the conference by putting forward a series of more modest proposals and it now looks as if the Howe plan will carry the day at Milan.
In The Times last Tuesday, Mr. Ian Murray wrote:
Britain's quiet takeover of the European Community this year … There are three areas which now dominate EEC thinking and Britain is in the forefront of all of them.
This week's Economist—which went to print before the events of the weekend—was clear on the subject:
A successful diplomatic offensive by the British.
Thus, we had a well orchestrated attempt to show that the Foreign Secretary was the new triumphant statesman of Europe and that his proposals would dominate a weekend that we now know was a sad humiliation for Britain.

Mr. Eric Forth: Perhaps the hon. Gentleman in developing his argument will make it clear whether he would prefer the line that the British Government were proposing at Milan to have prevailed or whether he backs the proposals that were made by the other Governments against which we voted. It would be instructive to have the Labour party's view on that.

Mr. Robertson: The hon. Gentleman more than most should know the answer to that, because he, unlike many of his hon. Friends, was present for all the debates that we had on this subject. He will recall, for example, that the debate to which I referred, on 20 June, concluded with the surprising decision by the Government to accept the Opposition's amendment. It may have been unique in this Parliament for an Opposition amendment to be accepted. That amended resolution represented the collective view of the British House of Commons. That made it absolutely clear that the negotiating position taken by the Prime Minister at the weekend represented a fair consensus of the parties.
I would not underestimate, or even disagree with, the Prime Minister's anger. However, that anger is only a cover-up for her incompetence. It is a synthetic fog that masks the fact that she went to Milan unprepared and with her homework undone. The humiliation that was the end result of Milan could have been avoided had she made even a basic assessment of the view of other Governments.
The Minister of State, Foreign and Commonwealth Office, who was the Prime Minister's representative on the Dooge committee, told us that a substantial number of other member Governments did not see the need for an intergovernmental conference. In fact, as seven of them voted at Milan at the weekend, it is clear that there had been a misreading either by the Prime Minister—who, after all, must carry the can—or by her advisers, who not only led her to expect that the British Government's view would be adopted but went to enormous lengths to

brief the press so as to get the headlines and carry the fiction that we would be the pioneers of what was to be the new European union.
The Prime Minister underestimated her colleagues in Europe and did too little preparation. This orchestration of press coverage provoked the other nations, which must have had an effect on events at the weekend. Now we have a shambles which makes no contribution to the vast task that needs to be done on behalf of the jobless citizens of the European countries. In having been so spectacularly wrong-footed, the Prime Minister has made this country look like a sick joke in Europe.

Mr. Marlow: The hon. Gentleman is being characteristically less than charitable — [Interruption.] Perhaps I should have said that he was being uncharacteristically charitable.

Mr. Robertson: I am obliged to the hon. Gentleman.

Mr. Marlow: The hon. Gentleman can take his choice. It is generally recognised throughout Britain that the Prime Minister has done more to secure Britain's interests in Europe, despite the difficulties that she has faced, than any of her predecessors and anyone else in this country could have achieved. The hon. Gentleman should recognise that. To go on berating the Prime Minister for what she has or has not done, given the failures of her predecessors, is wrong, unfair and gross. I wish that he would withdraw his remarks on that aspect.

The Second Deputy Chairman: I hope that the hon. Member for Hamilton (Mr. Robertson) will resist the temptation to take the debate too wide. I appreciate that he is still on his preamble, but I want to hear quite frequent references to the document to which reference is made in the amendment.

Mr. Robertson: You will hear so many references to that document, Sir Paul, in later stages of my speech that you will probably worry about having given me that advice. At present, I am trying to shed that light that you thought might come later in the debate on the events of the weekend and how they relate to the measures contained in the Bill that we are debating. I am sure that you, Sir Paul, and the Prime Minister, will have been deeply touched by what can only be described as some completely uncharacteristic remarks of support from the hon. Member for Northampton, North (Mr. Marlow). Whether or not my charitable nature is characteristic, for that hon. Gentleman to be charitable to the Prime Minister's view of the European Community will, I am sure, be seen unanimously as uncharacteristic.
The Prime Minister was frog marched up the garden path at Milan over the weekend. Our country suffered a humiliation, and we are left with a shambles. That can be put down only to a lack of preparation and incompetence in being out-manouevred by other members states of the Community. The amendment points out the nature of the deal that the Prime Minister has foisted on the nation and how we can be out-manouevred yet again if the Bill goes through unamended.

Mr. Teddy Taylor: The hon. Gentleman made the serious charge that the Government were in some way involved in the outrageous press coverage in that joke article in The Times by Mr. Murray, which contained at least five factual errors which have since been pointed out. I should be most disturbed if there were any suggestion


that the Government had had any relationship whatever with that ridiculous joke article in The Times, which, I am afraid, is typical of its coverage of EEC issues. Has the hon. Gentleman any proof to substantiate what he said? If not, will he withdraw the scandalous accusation that the Government had some relationship with or support for that outrageous joke article?

The Second Deputy Chairman: I am sure that the hon. Member for Hamilton will not be distracted from the amendment.

Mr. Robertson: Not even by a member of the National Union of Journalists will I be distracted from the serious points that I intend to pursue. If The Times article was the only article that was on the table in a joke form, the Committee might listen more carefully to such remarks by the hon. Member for Southend, East (Mr. Taylor).
The Bill is designed to make amendment and calculation more difficult. Two clauses and an explanatory memorandum that runs to two and half pages seem to be a device to preclude the Committee from properly scrutinising the legislation. When we consider the other documents which we wish to include in the Bill, the nature of the device becomes more evident.
The own resources document is not the only one that must be considered regarding the decision reached at the European Council meeting. Document COM(85)36 and its explanatory memorandum are of crucial importance. The hon. Member for Southend, East has already referred to the variations that are possible within that document. The impact of the document and the loopholes in it could easily affect the calculation if the good will that we are told has existed up to now were to break down. The communication underlines the failures at Fontainebleau. It underlines clearly how much less value are the undertakings than the objective set out by the Prime Minister in March 1984 after the Brussels summit, when she said:
first, that instead of a lasting, equitable system for Community financing there should be a five-year ad hoc arrangement which would have left us receiving less than the average refund which we received in the years 1980 to 1983.
That is what the Prime Minister said was wrong with the arrangement offered by Community Heads of Government at Brussels in March 1984. She went on to say what she thought of it:
I made it plain that neither the Government nor the British Parliament could accept such a package. Therefore, I did not agree to any increase in the Community's resources." — [Official Report, 21 March; Vol. 56, c. 1049.]
However, more than 12 months later, the package before us today is worse than the package offered at the Brussels summit in March 1984. Instead of a five-year ad hoc arrangement, we have an arrangement that will last only as long as the 1·4 per cent. limit holds within the European Community. That is how long this permanent arrangement will last.
It is clear from the Community's draft budget for 1986 that if it has already committed 1·35 per cent. of VAT on the strictest of assumptions which have never been adhered to in the past, the duration of the Fontainebleau formula will be only 12 or 18 months. Instead of a five-year arrangement and the "generous" proposition on offer in 1984 at Brussels, we now have an arrangement that will give us less than we got in our average rebates between 1980 and 1983. The arrangement will be less than two years old before it will inevitably have to be renegotiated

or subjected to intergovernmental agreement. That will mean pouring more money into the unknown targets that the European Community throws up.
In the explanatory memorandum and the own resources document there is a calculation that provides for two thirds of the real net contribution to be refunded to Britain. But now we are talking about 66 per cent. of a new net contribution. The figures have been massaged carefully by the EEC to reduce the contribution on which the 66 per cent. abatement will be calculated.
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We are fortunate in that the House of Commons Library has done the calculation. Its re search document 174 shows precisely what the rebate would have been in 1982 and 1983 had the Fontainebleau agreement applied. I will spare the House the details of the calculation, but the abatement, which is 66 per cent. of the gap between receipts and payments, would have amounted to £669 million. It estimated that the net contribution to the total budget before the abatement would have been £1,131 million. Therefore, in 1982, the abatement calculated on the Fontainebleau formula would have been 58 per cent. of the net contribution calculated on the new formula that is included in document COM(85)36. We are now talking in comparable terms of an abatement of 58 per cent., not the highly publicised and much trumpeted rebate of 66 per cent., which is often mentioned by Government spokesmen and which is included in the explanatory memorandum.

Mr. Spearing: Is not the difference even larger than that? Perhaps in asking my hon. Friend a question, I could give advance notice to the Government. That abatement is a percentage of the VAT rate that we would otherwise pay, but the abatement as a whole is over our total contribution to the EEC, not just the VAT element. It includes the large element from levies and customs duties that goes to Brussels, apart from the 10 per cent. retained for management costs. Therefore, the figure is even lower than the one given by my hon. Friend.

Mr. Robertson: My hon. Friend, who is a great authority on these matters, is right. Another calculation, which has been used to try to assess the abatement, shows it to be 49 per cent. instead of the much-vaunted figure of 66 per cent. We await with great interest the Minister's speech at the end of this debate, because we wish to see the Government's figures based on the new massaged figures that will be produced if this document is used.
On 24 April, the hon. Member for Southend, East asked the Economic Secretary to the Treasury which items have been subtracted from the calculation that will be made under the Fontainebleau agreement. He received this extremely significant reply:
The rest of the Commission's communication sets out its proposals for including in the allocated budget items that have hitherto been excluded."— [Official Report, 24 April 1985; Vol. 77, c. 482.]
The Minister peddles the same gobbledegook as the Commission. The hon. Gentleman asks, "What items have been omitted?" and the Minister replies, "Items have been omitted." If this was not a serious matter of enormous importance to Britain, one would have thought that that question and answer came straight out of a "Yes, Minister" script.
The matter becomes even more confused, because the documents do not make clear who will decide which items are included in or excluded from the calculation of Britain's net contribution to the EEC.

Mr. Teddy Taylor: That is made clear in the document that the hon. Gentleman is seeking, rightly, to incorporate in the treaty. The Commission makes the decision. Although its current view may be that everything should be brought within the allocated budget, it could change its view next week or next month unless the hon. Gentleman's amendment is successful.

Mr. Robertson: The hon. Gentleman is wrong, despite being right on a number of issues, because it is not clear that this is a matter solely for the Commission. If it were that clear, we would not be seeking clarification this evening. The document COM(85)36, final draft, on page 3 says:
The non-allocated expenditure will then be limited to those activities which are excluded on principle—development co-operation and similar measures which will be excluded by Council decision.
The hon. Gentleman will find that I am coming to the apparent contrast between that statement and the explanatory memorandum to precisely the same document, which in paragraph 10—and it is signed by the Economic Secretary to the Treasury—says:
Impact on UK law — None. The paper is an internal Community document which sets out the line of procedure that the Commission intends to follow in a process that is its sole responsibility.

Mr. Teddy Taylor: rose—

Mr. Robertson: I have a feeling that that is the definition to which the hon. Member for Southend, East is about to draw my attention, but there is a contrast between the two documents, which appear to say two different things.

Mr. Teddy Taylor: Does the hon. Gentleman accept that paragraph 4 of the paper given to us by the Treasury clearly states:
The Commission is now proposing that these items should be included in the allocated budget—some immediately and some gradually"?
It is signed by the Economic Secretary to the Treasury. In other words, he is saying, under his own signature, that the Commission is to determine these things. Surely the hon. Gentleman was not suggesting that that is not the case. The paper signed by the Economic Secretary to the Treasury makes it abundantly clear that it is the Commission, and only the Commission, that has the power to propose these things.

Mr. Robertson: The purpose of my amendment—and the purpose of the debate—is to try to elicit from the Economic Secretary to the Treasury, on behalf of Her Majesty's Government, what precisely is the case. There are conflicting statements, either of which would conflict with the Government's apparent boast that this is a permanent arrangement, which, if enshrined in British law, will lead to a permanent system of rebates for Britain and automatically guarantee that we shall be better off than we were under the pre-existing system.
The hon. Gentleman is right inasmuch as he points to a statement contrasting with the two statements that I have already made. Indeed, the 19th report of the Select Committee on European Legislation says:
The Committee are advised that once it"—
this document—
has been endorsed by the Council in this way, the Commission would be obliged to carry out the calculations in the form so endorsed. There could be a legal (as well as a political) base for contending that the Commission could not vary its terms without reference to the Council.
There is a clear conflict between statements made in those different documents and what is being said to the Committee.

Mr. Marlow: Will the hon. Gentleman give way?

Mr. Robertson: No, not at the moment.
There is an important issue of principle at stake here. We have been told, on Second Reading and in the Economic Secretary's article in The Times, that we have a permanent arrangement—something that has changed the rules for ever. The Economic Secretary was driven to say that in his article. Yet it is clear from the documents that the Council can make a decision to vary the terms on which our abatement is calculated or the Commission, off its own bat, can make a decision to vary the conditions under which our abatement is to be calculated; and on the basis of all historical precedent there is no chance that any arragement that they would calculate would be to the financial advantage of Britain.
It is incumbent on the Minister this evening, on behalf of the Government, to spell out precisely which of the conflicting statements is true and, whichever one of them is true, to explain to the Committee how the arrangement can be portrayed as a permanent one when the decision as to the calculation is again to be left in the hands of the faceless bureaucrats who operate in Brussels.

Mr. Marlow: The hon. Gentleman has made the point very clearly that we do not now know what our gap is and that control to calculate our gap is in the hands of the Commission. There are certain rules and the Commission can change them. He has made several points which contradict that position. We are in the early stages of a very important debate. If the Economic Secretary sought to catch Sir Paul's eye because he wanted to state the proper position as a foundation for the debate, would the hon. Gentleman be happy to sit down and let the Economic Secretary make his point?

Mr. Robertson: The hon. Member for Northampton, North knows that I have already shown my generosity in the debate. If the Economic Secretary wanted to enlighten the Committee or, to use your words, Sir Paul, to cast some light on the debate, he would find me more than willing to give way. The House of Commons will come to its own conclusion about the ability of the Economic Secretary to rise to his feet and to enlighten us on the matter. It is conceivable that he is waiting for further instructions—perhaps even from Milan—as to how he should answer the point.
The fact is that the arrangement is not permanent. It is much less generous than the system of rebates, as they were called. We now call them abatements to distinguish them from the previous arrangement. The new system is much less generous than the system of rebates which applied between 1980 and 1983, and which the Prime


Minister made her benchmark at the Brussels summit last year. The arrangement is not permanent, because, instead of even the five-year ad hoc arrangement that was offered at Brussels, we have an arrangement which is unlikely to last for more than two years before we are thrown back again into the maelstrom of financial negotiations.
The Bill before us, the abatement that is offered, and the calculation of it that is contained within the document and within the explanatory memorandum still does not provide for a system that puts our contribution to the European Community on the basis that was the objective that the Government set themselves at the beginning of the negotiations— an objective with which the Opposition heartily agreed.
On all those counts, and amid all the confusion that will surround the abatement now and in the future, it is right to underline the sense of failure from which the Government must be suffering in the wake of the Milan summit. We must hope that at the end of the debate the Committee will be more enlightened. If it is, I am sure that it will be even less enthusiastic about the Bill than it has been up to now.

Mr. Teddy Taylor: We owe a great debt to the hon. Member for Hamilton (Mr. Robertson) for raising a fundamental and important point on which we must have proper clarification.
The amendment proposes that certain detailed documents on the calculation of Britain's rebate should be incorporated in legislation and thereby not be subject to variation; in other words, they should constitute part of the treaty and not be something to be changed at the whim of the Commission.
What worries me is that, whereas the decision that is incorporated in the clause which the hon. Gentleman is seeking to amend states clearly and categorically that our rebate will be based on applying a formula to the difference between VAT and allocated expenditure, we have an assurance that the definition of allocated spending will not be changed. The assurance in the other paper is that the present criteria on allocated expenditure will be adjusted so as to eliminate the exceptions made for practical reasons.
The Commission is proposing that adjustments should be made so that more items are regarded as allocated expenditure and thereby potentially qualify for a rebate. If the Commission's objective is not regarded as a treaty as the decision is, there will be nothing to stop the Commission from changing its mind and altering what is regarded as allocated expenditure. That will have an effect on Britain's rebate or on the way that it is calculated.
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If the Government wish to gain approval, quite apart from the inadequacies of the contribution arrangement, we must have some certainty. I have already expressed serious misgivings over the fact that, at a time when the Government are reducing expenditure in many vital areas, for reasons which they have made obvious, and which I support, we shall be paying such an enormous sum into the Common Market. It is important that the Government justify the principle behind the Bill. The formula which the Government believe is good should be clear and not subject to adjustment by the Commission.
My hon. Friend the Minister may think that I am being unduly suspicious. He may claim that the Commission has given that assurance in the document which is covered by

the amendment, and that it is in fact contained in a letter which was sent from a Mr. Andriessen to a Mr. Andreotti, who was President of the Council of the European Commission. Is that assurance enough? On the basis of past assurances we cannot accept messages of good will and good intentions from the Commission. We must remember that the Commission is not answerable to the people of this or any other country. It is a body of unelected civil servants. The Commission is constantly changing. Some strange people move in and some unusual people move out. That represents an enormous staff migration.
My right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) said during our last debate that the Commission staff was smaller than that of the Scottish Office. That may have been true in the past, but I must point out that the staff of the Scottish Office includes all the warders of Scottish prisons and the staff of the state mental hospital in Carstairs. Even with all those people, the Commission staff is now bigger than that of the Scottish Office. There are now 12,700 staff and, sadly, the numbers are still growing. A Foreign Office Minister wrote to me this morning and said that that number would increase because of the admission of Spain and Portugal, which would mean more staff, including translators.
Is it right that the calculation upon which our rebate will be based should be decided by the Commission and its civil servants? My hon. Friend would save the House a great deal of time if he were to interrupt now and say that my query is answered by the decision—the document which we are incorporating into the treaty. If it is the Commission's decision that it will eliminate unallocated expenditure for the purpose of calculating our rebate, I can immediately resume my seat and say that my fears are groundless. Although there are repeated references to that in the method document, it is not in the decision document, and surely that should worry us.
My hon. Friend may say that I am being unduly suspicious and that the Common Market has always kept its word in the past. Unfortunately, that has not been the case. We have disagreed with the Common Market on many occasions where our national interest has been at stake, and Britain has invariably come off worst. I quote as an example the case of some of my former constituents who worked in the steel industry. They were told that a new policy would be introduced which would be fair to everyone. The Commission gave assurances that everything would be applied fairly. When I and other hon. Members asked about that we were told not to worry and that the Commission would ensure that the policy was applied fairly and properly.
We have all seen the results of that assurance. We know what has happened. The number of people employed by the British Steel Corporation has been cut by more than a half, whereas we know from a written answer that Italy's capacity has increased. Those poor unemployed British steel workers who relied upon the assurance that they had from the Commission are on the dole, while Italy has been expanding its steel industry. That is surely wrong.

Mr. Forth: My hon. Friend is correctly drawing Italy's conduct to the Committee's attention. Is it not relevant that over the past week it is the Italians who have been leading the cry for greater European unity in Milan, but on the important issue of the steel capacity it was the Italians who let down the Community by not adhering to what was


supposed to be Community policy? I am sure my hon. Friend is also aware that it is the Italians who are constantly in breach of rulings of the European Court of Justice—another of the key institutions which will no doubt contribute to increased European unity. How does my hon. Friend explain the fact that the Italians always lecture us — they have been lecturing my right hon. Friend the Prime Minister in Milan about European union — although it is the Italians who are further from upholding the concept of European unity than anyone in the Community?

The Second Deputy Chairman: Order. I hope that the hon. Member for Southend, East (Mr. Taylor) will not be led astray. That point goes rather wide of the amendment that we are discussing.

Mr. Taylor: My hon. Friend has made an important point about the way that the Community's policies work. We could not, however, discuss that point under this narrow amendment. He was right to point out yet another example of the way in which the Commission does not work well unless points are clearly spelt out and entrenched in law.
That is the point of the amendment. It has not been spelt out clearly in the document, which the hon. Member for Hamilton wants to incorporate in the legislation, that the Commission's policy is to eliminate the exceptions of unallocated expenditure. As the hon. Gentleman correctly pointed out, unless that is incorporated and becomes part of the deal we shall have no protection, first, against any decision being changed and, secondly, against the decision being torn up, as my hon. Friend the Member for Mid-Worcestershire (Mr. Forth) said, by the Italians, just as they have torn up other decisions.
Unless we have an agreement on which we can go to the European Court of Justice, we have no protection. I wonder, Sir Paul, whether you have had the pleasure, as some of us had, of reading the European Community's Court of Auditors' report. I was appalled to read how some members of Italy's criminal element have been financing themselves by obtaining huge payments for the destruction of non-existent tomatoes. It cuts down crime, because those people do not need to become involved in crime. They obtained their cash flow by applying to the Italian civil servants to destroy non-existent tomatoes from nonexistent farmers.

Mr. Budgen: Will my hon. Friend comment on the story that we read in the newspapers some months ago that when someone from the European Court of Auditors went to Italy to investigate a number of those allegations he was attacked and suffered a broken leg?

Mr. Taylor: Yes, unfortunately that type of thing is happening. It proves that it is not good enough to have a gesture of good will or good intention from the Commission. We must have the points spelt out so that we can go to the court.

Mr. Richard Body: My hon. Friend has referred to the Court of Auditors. Does he appreciate that it has repeatedly made allegations and urged the Commission to put matters right? The Court of Auditors has twice submitted a report to the European Parliament on a number of issues and yet, despite there

being an opportunity to put matters right, they have not been put right. The Court of Auditors, laudable body though it may seem, is not proving effective, because neither the Commission nor the European Parliament pays sufficient regard to it.

Mr. Taylor: If this were a wider debate, I should agree with my hon. Friend. It is rather unfortunate that we spend money on this so-called European Assembly. I am sure that no one would notice if it disappeared tomorrow, but we cannot discuss that point when we are dealing with a narrow amendment. Unless the Government can spell the matter out so that we can go to the European Court of Justice, there is no assurance.
My right hon. Friend the Prime Minister is a doughty fighter to control public expenditure. She is a splendid campaigner for common sense in public spending, and she has had repeated assurances from the Commission that it will take steps to cut the export of cheap food to the Soviet Union. Those assurances have been repeated in the House. We know what happens, however—the export of cheap food to Russia is now breaking all records. We are now sending 145,000 tonnes of cheap subsidised food to Russia and Eastern Europe every week, and at the most crazy prices—top quality beef at 35p per pound and wine at 4·5p per litre. If, instead of assurances and good will, we had matters spelt out in law or in treaty, we could go to the European Court of Justice and say, "They are breaking the rules. They are giving money to the mafia to destroy non-existent tomatoes. They are refusing to give compensation for a broken leg suffered by a civil servant who tried to stop it."

Mr. Leighton: Is the hon. Gentleman aware that there is no proper auditing of these accounts? Is he aware that the Court of Auditors does not have the machinery, but relies on national machinery, the quality of which varies? Is he further aware that the intervention price of oranges is decided by the price set in Sardinia, and that the price in Sardinia is set by the supply of water, which is controlled by the Mafia? Therefore, the price of oranges is controlled by the Mafia, and we are all being ripped off.

Mr. Taylor: The hon. Gentleman is absolutely right, but I cannot pursue that matter because it is not covered by this narrow amendment. It makes by blood boil that my local hospital authority has to contemplate ward closures when millions of pounds are flowing daily to the extravaganza of the Common Market. Unfortunately, we cannot discuss that on this narrow amendment.
We should not make the same mistakes again. When we are told that Britain will get a substantial rebate, we must ensure that there are no loopholes. The only way to block those loopholes is to ensure that everything is covered by law, so that we can go to the European Court of Justice.
Why are the Government unwilling immediately to accept the amendment? What would be wrong in incorporating the document? I have looked for an explanation and read the Government's papers. The Treasury document refers to COM (85)36 in the following terms:
In order to accurately calculate the figures involved, a more detailed methodology is required than could conveniently or appropriately be included in the own resources decision itself'.
What on earth does that mean? We are not incorporating or printing the own resources decision. It is not in the Bill,


because if it were there would be 1,000 amendments on account of its inadequacies. We merely have a reference to the fact that the decision is regarded as a treaty in terms of the European Communities Act 1972. If the Government decided to accept amendment No. 5, they would not have to spell it out or print it—they would simply have to say that this Commission decision is included. I cannot understand what is to be lost by doing that. It would mean one extra line in the Bill—perhaps only half a line.
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Can the document covered by the amendment be changed by the Commission, which is comprised of civil servants, or by the Council of Ministers by directive? Is it not just possible that our firm assurance on the rebate could be adjusted by the Commission changing what it regards as unallocated expenditure? I have no complaints about the document COM (85)36, because it says:
As for the future, the final objective should be to apply the criteria in full, i.e. to eliminate the exceptions made for practical reasons. The final objective will he achieved, as rapidly as possible, as set out in Table 2 in Annex 3: for chapters in the first column: immediately, that is when the breakdown of expenditure for 1985 is calculated;
The intention is good — all expenditure, with the possible exception of overseas development expenditure, will be included. Rebate will be on total allocated expenditure. That means something. However, there is nothing to stop that being changed unless the policy decision of the Commission is incorporated in law. That is why the amendment should be accepted.
Is COM(85)36 considered too long for inclusion? That cannot be the answer, as it is no longer than the decision. As was said several times during the points of order that were raised, we are still somewhat in the dark about amendment No. 5. because relevant decisions have been made in Milan. We have read in the papers — it might or might not be true — that they are thinking of setting up some grand new office to establish a European political policy, under which, it has been suggested, Governments would be instructed on how to vote at the United Nations. Will that use allocated expenditure, or unallocated expenditure? I do not know, but we are entitled to know.
Some people have said that it would be good to have a Community foreign policy. I remember the invasion of Afghanistan, when the Council of Ministers issued a statement that was less strong than that issued by the Italian Communist party. The Government are using money to establish a new bureaucracy which will form a Common Market Foreign Office. It will obviously be a big thing and expensive, and it is quite likely that some of our Foreign Office staff who work on EEC affairs will join it.
I have another question which also arises directly out of the meeting at Milan, which is why we should not be debating the Bill today. We should know first what was decided in Milan, rather than what accurate newspapers, such as The Guardian, and inaccurate ones, such as The Times, have to say about what might have been agreed. It has been confirmed in parliamentary answers that overseas aid expenditure has gone haywire because, although the Common Market said at Dublin that it would send 1·2 million tonnes of food to the drought-afflicted countries of Africa before their harvest, it has not been able to do so.
The Common Market has managed, however, to expand its export of cheap food to the Soviet Union, Bulgaria, East Germany and Czechoslovakia, but the

export of 1·2 million tonnes of food to the Sahara has gone wrong. It seems that less than half has been delivered. We shall therefore have a substantial underspend. It is tragic that, when the Common Market is overspending wildly on the export of cheap food to Russia, on steel and on the expense of the European Assembly, the one area on which it is underspending substantially is aid to Ethiopia, Mali and other countries facing hardship.
We cannot discuss that matter on this narrow amendment, but what will happen to the money that is saved by not sending food to Ethiopia and Sudan because of inefficiency or a lack of will? Will the money be allocated expenditure for next year? According to the decision, money can be carried forward after 1986, but can it be carried forward from 1985?
This is a matter on which we must advance. If we do not incorporate the measure, what will happen to 1985 underspending, which has meant that, tragically, the Common Market has failed to keep the promise made at Dublin, to deliver food to the drought-stricken countries of Ethiopia, Mali and Sudan? I should like to know what the score is. Is that allocated or unallocated expenditure?
Surely the Minister accepts that on this bad deal for Britain, according to the estimates in the Treasury White Paper, we as a nation will pay £970 million net into the Common Market in 1987, which is well above what we have paid in previous years and much more than countries such as Italy which are paid for being members of the Common Market. If we are to pay the absurdly high sum of £1 billion a year net into the Common Market, surely the least that we are entitled to is a clear assurance that the total will not be increased by an administrative decision of the Commission.
Is it sensible for a great democracy such as Britain to have such decisions in relation to the amendment made by people who are not elected, but are civil servants of the Common Market? European union just cannot work, because the democratic tradition of the continent is so different, by giving more power to the Administration rather than to the politicians.
Surely the Minister can accept that even on this poor agreement for Britain, which will mean spending £1 billion a year on our net contribution, we must have certainty. We cannot have that certainty until the basis of allocated expenditure is spelt out in such a way that if anyone should try to cheat, and if the Commission tries to change the rules, we can go to the European Court of Justice and demand that something be done. Can we go to the European Court of Justice on the basis of a letter that was written way back in February 1985 from Mr. Andriessen to Mr. Andreotti? We cannot do that, but we can go to the court if something is regarded as a treaty, or is fact. Therefore, I think that the good intentions of the Commission, and its intention to eliminate the exceptions to allocated expenditure, must be incorporated as part of the treaty. Then we can do something if attempts are made to change our contribution.
I hope that the Minister will not simply say that we have full confidence in our friends in the Community, that they will do everything right. The way that things are going, the Minister may well find that before the Bill has been law for six months the Community has been changed. The six original members will have their Common Market, and the others, including ourselves, will be in a different sort of Common Market. What will be our position then in appealing to the Commission to carry out its message of


good will? It is abundantly clear that the six original members of the Common Market are desperately keen to go their own way and have a treaty of union and goodness knows what.
The British people would never stand for us being involved in such a denial of our basic democracy. The change will come. Unless it is spelt out in law, we have no assurance at all. Without that assurance it would be possible for the Commission or the Council of Ministers to say that they had decided to change what they regarded as allocated expenditure and that they were pressing a new decision, passing a new directive. They should do so by majority vote, because more things can now be done by majority vote, but where is our protection? The Minister might say that it would be intolerable if that happened and that the Republic of Ireland and Denmark might rush to our aid. That is not much help if all the other member states are voting against us. Britain is sometimes on its own in the EEC. We do not have many friends in the Community, so that could happen. Therefore, we must incorporate the measure.
The Minister may say, "Even if the calculation is incorporated it will not safeguard us fully against the dangers, because it says simply that the objective of the Commission is to eliminate unallocated expenditure." Of course it will not be a full safeguard, but at least it will be something on which we could go to court. If one incorporates the provision in a treaty, saying that something is the objective and intention, one has something to go on, instead of nothing. If we do not do that, what is already a tragic deal for Britain, which will cost us £1 billion per year, will look a great deal worse.
As the Minister is aware, we are all the time finding out that things are worse than they were. The other day we received the appalling information that on top of our £5 billion net contribution so far, £1,700 million of our receipts are not receipts to Britain, but payments to British traders to send cheap food to Russia. So the money does not come to us at all. Therefore, we are finding all the time that it is costing more and more. Unless we can firm up on what has allegedly been the deal, we shall be relying totally on the good will of the Commission and the Council of Ministers. That is not good enough for us. The Government are insisting that we pay £1 billion net per year to the Common Market. We must say, "That is all. No more." When I say "no more", I mean, as well as no more contributions, no more fiddles, frauds or ways of getting around it. Unless that is incorporated, we have no assurance.
For once, let the Common Market be united and say whether it agrees with the British deal. We should say whether we think £1 billion a year is too little, as some of our right hon. Friends think, or whether £1 billion a year is too much, as I believe. Whether we disagree or agree with that, let us agree at least to firm up the arrangement so that the Common Market cannot make us pay more by shifting round allocated and unallocated spending.
I hope that the Government will accept the amendment. I hope that they will not reject it because they say that it is inadequately drafted. I hope that they will agree to another one to firm up the arrangement. We want a clear, binding assurance that we shall not give the Common Market a penny more than the £1 billion net payment a year under the agreement. That is more than enough for

me. I hope that every hon. Member, including those who vote for the Government and think that the Common Market is the best thing since sliced bread, will at least agree that we should not leave a loophole, which will mean that the £1 billion a year could become £1·25 billion or £1·5 billion. It should not happen at a time when the Government and the Treasury are telling local authorities and hospital authorities to cut down on spending. We must be firm on the matter. If we are not firm there, we might as well give up.

Mr. Nigel Spearing: The hon. Member for Southend, East (Mr. Taylor), which, after all, is the VAT capital of the country, has put a most compelling case. We look forward to the Minister's reply.
In the relative informality of Committee, I should like to thank you, Sir Paul, for your patience at the beginning of our proceedings. However, you may recall that when the European Communities Bill was discussed in 1972, your predecessor, Sir Robert Grant-Ferris, started taking points of order at 3·30 pm one day. I think that they went on all night for some 16 hours, and we started on the first amendment at 7 am the next day. That was not surprising because the points of order, like those that we are dealing with at the commencement of the Committee, were about the powers of the House and its control of money. That is the heart of the power of Parliament.
The amendment relates to the method of calculation of such a transfer of money. It is a refinement; it is an additional requirement that we are making of the Government in the way in which the hon. Member for Southend, East described, precisely to put that formula and its rules into treaty form and into British legislation by becoming part of the Act. Unless the amendment is accepted, that will not happen.
The calculations relating to the flow of money are important. During the discussion of the Bill to which I have just referred, the then Prime Minister said that those matters did not affect the Crown, and that the position of the Queen would be unaltered. However, that is not true, because the money that will flow from the Act, the treaty and that calculation, if it is incorporated, relates to section 2(3) of the European Communities Act itself, which states:
There shall be charged on and issued out of the Consolidated Fund or, if so determined by the Treasury, the National Loans Fund the amounts required to meet any Community obligation to make payments to any of the Communities or member States, or any Community obligation in respect of contributions to the capital or reserves of the European Investment Bank.
It then lists all sorts of other obligations placed on the House and the Treasury. The document that we want to include in the decision will determine the sums that the Treasury is obliged to pay. In other words, it affects the obligation of the Crown to pay without further question more or less moneys. That is why we want the document included in the decision.
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The decision, which is Cmnd. 9549, says in article 3, paragraph 3:
The rates shall be calculated as follows.
Subparagraphs 3 and 4 spell out how the calculations relating to rates and rebates are made. One might have thought that that was sufficient. What is the need for any further document? As the hon. Member for Southend, East said, there is considerable further documentation in COM (85) 36. Indeed, a full description is given in the Treasury financial memorandum, which the Financial Secretary


signed on 27 March, and which the hon. Member for Southend, East quoted. I repeat the extraordinary sentence:
In order accurately to calculate the figures involved, a more detailed methodology is required than could conveniently or appropriately be included in the own resources decision itself.
That is an extraordinary statement. I am not blaming the Financial Secretary for inserting it in the explanatory memorandum because it is a true description. Why is it not included in the decision in Cmnd. 9495, which was originally a council document translated into a British command paper? I shall return to that point towards the close of my remarks.
The Scrutiny Committee on European Legislation in its fifth report this Session, HC 5 XIX, comments on the status of the document. It states:
The Committee understand that the calculations proposed in this instrument follow precisely the form expected following discussions with the Commission and that it meets the Government's requirements accordingly. They note from the Treasury Explanatory Memorandum that the Council of Ministers will be invited to endorse it by a statement in its Conclusions when it finally adopts the new Own Resources Decision (i.e. placing on the record that the Commission has proposed this method of calculation and that it has been accepted by Member States). The Committee are advised that once it has been endorsed by the Council in this way, the Commission would be obliged to carry out the calculations in the forms so endorsed: there could be legal (as well as a political) base for contending that the Commission could not vary its terms without reference to the Council.
I take it from that that there may be other possibilities. The Committee continues:
The Committee note that the unusual status of the present instrument arises from its origins in Article 3(3), (4) and (5) of the main 'Own Resources' instrument.
If the instrument arises from the decision, why can it not be part of it? Why is that instrument not part of the designated documents, which make up the whole treaty? We look forward to the Minister's replies to those questions.

Mr. Teddy Taylor: Did the hon. Gentleman's Committee believe that the Government could go to the European Court of Justice, if the Council of Ministers or the Commission decided to adjust what they regarded as allocated expenditure for the purpose of Britain's repayment?

Mr. Spearing: I am grateful to the hon. Gentleman because that is the legal nub of the matter. The matter is completely uncertain. It is uncertain whether the Commission can change the formula with or without the permission of the Council, whether the Council's decision must be unanimous or in some other form, and, whatever the outcome of that, whether COM(85)36 is part of the treaty. The formula is not part of the decision, and, therefore, I am not sure whether the European Court of Justice could accept locus in it. The court might accept locus because the document is a council decision. If there were an argument between the Council and the Commission about who had the final say about whether COM(85)36 should be changed and, if the document changed, within what limits, there might be locus for the European Court of Justice. I do not know whether it is binding as an international treaty and as a Community treaty, which is what our Bill attempts to designate. That is a grey area which should not exist. That is a reason why the amendment should be accepted.
The Government have not made it clear how they stand in relation to other parts of the calculation, of which the

document is part. I referred to that in a brief intervention in the speech of my hon. Friend the Member for Hamilton (Mr. Robertson). During the past few weeks, all the talk has been about VAT contributions. The percentage has been raised from 1 per cent. to 1·4 per cent., and it has been claimed that the present Community partners will have to raise their VAT contributions to 1·35 per cent. while ours will be less than 1 per cent. We forget that the VAT element is but one component, albeit an important one, of our contributions to the EEC.
That was spelt out in the document produced by the Scrutiny Committee, HC 78 VI, Session 1983–84 entitled:
Future Financing of the European Community.
Table 1 is clearer there than any Government statement. The Economic Secretary will correct me if I am wrong, but I have not seen the table brought up to date so clearly. It shows that in 1982, the last year shown in the table, our VAT contributions amounted to £1,554 million. However, our combined customs duties and agricultural levies amounted to more than £1,200 million. Therefore, although the VAT element was greater than that of levies and customs, it was only slightly more than half of the total contribution.
The reason for new own resources is that the agricultural levies and the customs duties are a fixed sum. If anything, they may decrease, but they cannot be enlarged unless the common Community tariff is increased. That would not bring in a great increase. Therefore, all the increase must fall on the VAT element, which is why the 1 per cent. ceiling has had to be increased. At this stage, I must ask the Economic Secretary to confirm that the 1 per cent. VAT contribution is incorrect and that the figure is more like 10 per cent. of VAT take.
One of two consecutive articles by Mr. Ian Murray, which tell us why we should have passed the Bill last week, got that entirely wrong. He implied that the 1 per cent. VAT was 1 per cent. of VAT yield. In our Select Committee report it was clear that the figure was 10 per cent. or more of VAT yield, even at 0·98 per cent., or whatever we paid last year. As a rough guide, therefore, a 1 per cent. VAT contribution means about 10 per cent. of our VAT take.
Let us consider what has happened so far. I am obliged to the Library for providing figures not easily ascertainable without poring over many pages of Hansard. I understand that the provisional figure for our VAT own resource contribution for 1984 is about £1,729 million while the amount arising from customs duty and agriculture levels is about £1,500 million. I mention those figures because the Economic Secretary, whom I am glad to see in has place, in his article in The Times of 25 June made great play, as all the publicity does, of the fact that we shall be paying much less as a result of the rebate formula being discussed in this debate. The article says:
Although the VAT rate for other member states is put at 1·35 per cent., the UK's Fontainebleau abatement of over £800 million means that our VAT rate would be 0·82 per cent., well below the current ceiling.
I hope that when the Economic Secretary replies to the debate he will confirm two facts. First, the 1·35 per cent. is the enhanced VAT rate for the other partners and not the standard rate on which our 0·82 per cent. would be calculated. In other words, to the casual reader the gap seems much greater than it really is. If that is the case, as


I have every reason to believe that it is, the Economic Secretary should say so and tell us why that inaccuracy occurred in his article in The Times.

The Economic Secretary to the Treasury (Mr. Ian Stewart): indicated dissent.

Mr. Spearing: The Economic Secretary shakes his head, but I understand that the figure of 1·35 per cent. in the documents which have emerged unofficially from Luxembourg includes the additional VAT contribution that our partners would have to carry as a result of our abatement. One of the complexities of this matter, with which even in Committee we have scarcely been able to grapple, is that the document under discussion provides for a cascade of recalculations. The rebate to Britain is calculated and that amount is then redistributed to increase the VAT contribution of the other member states. Moreover, that is not the end. There is a second cascade because the German contribution is then abated by 30 per cent., which is also redistributed. I suggest, therefore, that the 1·35 per cent. relates to the second final calculation and that the standard rate is more like 1·28 per cent., as has been unofficially quoted in Brussels. The hon. Gentleman's article in The Times thus makes the difference appear greater than it really is.
My main complaint about the Government's wide publicity on this is that the abatement is not even as great as I have suggested if I am right about the 1·28 per cent. standard rate because the abatement relates to our total contribution and not just to the VAT element. The Library tells us that the total contribution for 1984 will be about £3,259 million. If the abatement mechanism comes into effect our VAT rate may well fall to 0·82 per cent. and thus be below the 1 per cent. as the Government claim. My complaint is that the Government are applying the reduction just to the VAT contribution and not to the whole contribution. If one goes into a motor car showroom and is told that the basic price of a car is £5,000 and the extras are another £5,000 but that there is a rebate of 66 per cent. on the extras, the ultimate price will be reduced from £10,000 to between £7,000 and £8,000, but it would be quite wrong to claim that one had secured a rebate of 66 per cent. on the price of the car. The Government in their publicity have successfully exaggerated the rebate because it should be applied across the whole range of our contributions and not just to the VAT surcharge.
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At the end of document COM(85)36, which has been omitted from the decision that we are asked to endorse in the Bill, there is a series of tables and annexes setting out the exact criteria relating to allocated expenditure. The hon. Member for Southend, East repeatedly and effectively asked why the definition of allocated expenditure was not included in the decision when clearly it should be there. It is not found in the decision or even in document COM(85)36, but in the annexe to that document. The Economic Secretary said that that document is illustrative, but if he cannot accept the inclusion of the whole document he should at least agree that the annexes should be part of the decision. If he cannot agree to include them he must tell us why they were not included in the first place. Although those illustrative figures and calculations are extremely helpful, especially

the calculation of Britain's 66 per cent., it may have been regarded as inappropriate to include illustrative figures in a treaty. Nevertheless, it is highly appropriate and indeed essential that the definition of allocated expenditure should be included. It is a matter of frightening complexity. The abatement of 66 per cent. about which the Government have been shouting so much applies only to the difference between our VAT share contribution and our share of allocated expenditure—that is the nub of the formula—so the definition of allocated expenditure is vital and should have been included in the decision. That is why the amendment has been moved and that is why I shall support it.

Mr. Budgen: The hon. Member for Newham, South (Mr. Spearing) has much assisted the Committee by explaining the importance of the definition of allocated expenditure. In so doing, he has reminded us of the fundamental conflict which occurred in Milan at the weekend. The Government frequently refer to the arrangement that they so fortunately and skilfully obtained at Fontainebleau as a permanent reduction of 66 per cent. in our contribution to the EEC. They also stress that instead of the old arrangement, whereby we paid a gross contribution and snatched back a rebate later after many rows and difficulties, we shall now have an abatement and make a net contribution. As the hon. Member for Newham, South so helpfully pointed out, however, the Government have said very little about the basis on which the 66 per cent. reduction is calculated. That is important.
I hope that I do not see disagreement where none exists, but I suspect that last weekend at Milan there was a fundamental conflict between my right hon. Friend the Prime Minister and the Foreign Office. It may well be that the Foreign Office had got the whole thing nicely lined up for a sell-out from which the Prime Minister would not be able to escape.
In no way, Mr. Walker, do I wish to give you unnecessary exercise, but I say that because we are talking about allocated expenditure, and expenditure is at the very root of political decision. Ten days ago my extremely eloquent hon. Friend, the Minister of State, Foreign and Commonwealth Office, spoke about the Foreign Office's attitude towards majority decisions — [Interruption.] I hope, Mr. Walker, that you will not keep looking as though you are about to take some unnecessary exercise, because this is about expenditure. My hon. Friend said:
The Government believe that it is desirable to encourage more majority voting within the Community." — [0fficia/Report, 20 June 1985; Vol. 81, c. 472.]
My hon. Friend went on to explain that at length. As he does not speak from any notes or prepared text, no doubt he spoke from the bottom of his Foreign Office heart, for I assume that even the Foreign Office has a heart. He explained that he and the Foreign Office were in favour of a substantial extension of majority voting in the Community.
Was that just a fraud? Was it just something that he thought up as a Gaullist bit of hypocrisy in order to con the rest of the EEC? That is not the spirit of the modern Foreign Office. It does not talk in terms of the British national interest or of trying to put forward the legitimate interests of our people. It talks, as do American Foreign Secretaries, in terms of human rights and morality. It uses all the jargon that Mr. Gladstone used to use. It no longer talks like vulgar, coarse old Tory Foreign Secretaries of


State. There is not the sort of talk that Mr. Disraeli would have enjoyed as he denounced the moralistic vapours of Mr. Gladstone.
I am tempted to call the Minister of State my right hon. Friend. I am sure that as he speaks on foreign affairs with the voice of the modern Tory party, he will become just that. However, I am sure that my hon. Friend was right when he put forward the Foreign Office view about wanting more majority voting. We then must ask the Prime Minister about the areas in which we want this extra majority voting, because if the area is in any way to be important, it is likely to lead to extra expenditure. If my hon. Friend means majority voting in relation to an extra burst of the European international outlook, that will not cost very much. But if, for the sake of argument, he believes that majority voting should, for instance, be allowed on the setting up of the new secretariat that will concern itself with EEC foreign affairs policy, that will surely give rise to increased allocated expenditure.

Mr. Teddy Taylor: My hon. Friend obviously knows a great deal more about this than most of us. He has said that the new Common Market foreign office will mean allocated expenditure. How does he know that? Ever since I read the reports of Milan, I have tried to discover whether this will be allocated or non-allocated expenditure. Where has my hon. Friend learnt of this firm decision which I cannot obtain from any Government Department? Who told him that it would be allocated expenditure?

Mr. Budgen: I am not saying that, and I apologise to my hon. Friend and the Committee if I have given a false impression. I was simply saying that the area in which the British Government would agree to an extension of majority voting ought to be carefully defined. If we talk in the eloquent terms in which the Minister of State — who I hope will soon be my right hon. Friend — spoke 10 days ago, that will give rise to extra allocated expenditure, and the poor old British taxpayer will have to pay for it.
My hon. Friend the Member for Southend, East (Mr. Taylor) reasonably attacks me for the looseness of my speculation. But that looseness is entirely caused by the fact that, sadly, the Prime Minister is unable today to see off a large number of European nation states and the Foreign Office by explaining that she wants the most important limitation of this extension of majority voting. That inevitably leads me to loose speculation which my hon. Friend, with his practical Scottish mind, finds deeply disagreeable.
I point to an attitude towards public expenditure—for EEC is certainly public expenditure — that was recently indicated by my right hon. Friend the Minister of Agriculture, Fisheries and Food. On 13 June, I asked my right hon. Friend, when he was trying to agree some form of restriction on the prices of cereals, whether he had inquired if the proposals were within the budgetary guidelines. In what was no doubt a Freudian slip, he said:
I have been alone in asking the Commissioner, at almost every point of the negotiations, whether he remains satisfied that the cost of the package is within the financial discipline that has been agreed for the agricultural budget."—[Official Report, 13 June 1985; Vol. 80, c. 1039.]
If we do not know where the majority voting is to be extended, we shall find that the base—

Mr. Marlow: My hon. Friend knows that this issue exercises my mind and worries me almost as much as it

worries him. He will be aware that this Bill is about setting a limit and a ceiling on the amount of Community expenditure. He is saying that if we are to go towards majority voting, other policies may be brought forward, with detrimental effects on the interests of the British taxpayer. Within the allocation of European policies that might have an effect, but there is to be a real ceiling on European expenditure because we shall agree to a 1·4 per cent. limit.
The Government have given no sign that they would dream of exceeding that 1·4 per cent. ceiling. I am sure that when my hon. Friend the Economic Secretary makes his winding-up speech, he will go beyond that and say that not only will the Government not go beyond the 1·4 per cent. ceiling in the life of this Parliament but that they have no intention, and it would be over their dead body, that there should be any further loans or intergovernmental agreements. I think that my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) is unnecessarily concerned.

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Mr. Budgen: I hope that my right hon. Friend the Prime Minister will see off the Foreign Office tomorrow and explain that she is not prepared to agree to any majority agreements that could give rise to extra allocated expenditure. That, as you were implying to me by your firm look, Mr. Walker, is what we are talking about.

Mr. Chairman: Order. That is not what we are talking about, because, as I understand it, there is no reference in the Bill to, nor has it any relationship with, majority decisions taken within the Council of Ministers or any other meeting in the EC. I hope that the hon. Gentleman will keep to the terms of the amendment and the Bill before the Committee.

Mr. Aitken: On a point of order, Mr. Walker. It may be helpful to the Chair to know that during points of order earlier, the Second Deputy Chairman ruled that it was in order for us to discuss things to do with the Milan summit in the course of our debates on these amendments.

Mr. Budgen: rose—

The Chairman: Order. The hon. Member for Thanet, South (Mr. Aitken) has raised a point of order and I shall respond. As I understand it, the Second Deputy Chairman ruled that it was in order to refer to the meeting in Milan in so far as that related to our proceedings. It is highly questionable whether it would be in order to discuss the effects of majority decisions on the Bill before the Committee.

Mr. Budgen: I think that you will agree, Mr. Walker, that we are trying to incorporate within the Bill a Community decision. The Community decision refers to allocated expenditure; but, as my hon. Friend the Member for Northampton, North (Mr. Marlow) pointed out, it does not define allocated expenditure. I am saying that if we are not careful, an extension of majority voting, which was so eloquently advocated by the Foreign Office, but sadly apparently not with the approval of my right hon. Friend the Prime Minister, over the weekend, might mean that there is a majority decision — for the sake of argument., setting up an enhanced EC energy policy, which has been fashionable among those who are keen on the EC — which will have an effect on British interests.
It might be said that there can be an enhanced energy policy but we shall not allow it to be regarded as allocated expenditure. That is to say, the EC can, if it wishes, carry on spending all the money that it likes on some policy that it has enforced by majority ruling, but the British are not prepared to pay. These are some of the issues that my right hon. Friend the Prime Minister will be able to clarify when she makes her statement to Parliament tomorrow, as I hope she will. It would be difficult, even for a loyal supporter such as myself, to try to support her position if she failed to come to the House of Commons even tomorrow.
My hon. Friend the Member for Southend, East spoke about the activities of the European Court of Auditors. He made a certain amount of fun of the Italians. In many instances, the Italians are not as nationalistic as we as a nation are, but they displayed a rather violent nationalism when they set about the gentleman from the Court of Auditors who wished to inquire whether they were ripping off the rest of the Community. I do not wish to make fun either of the Italians or of the unfortunate nark who came to inquire into their activities. They demonstrated for all to see an interesting problem in the EEC.
We all complain about the dishonesty of other nation states in the Community. We talk about the way in which the Germans are reluctant to allow cereal prices to be reduced. We talk about the potential that the Greeks have for creating another wine lake. We talk about the problems of persuading the Irish to accept milk quotas. But we come to one fundamental question every time that we do so: would we as a nation accept a supranational authoritative EEC enforcing against us any of the decisions of the EEC?
If we were sitting at home, for instance, filling in our suckler cow subsidy or our sheep subsidy form and, bang, bang, there was a knock on the door and a big man with a staff in his hands, perhaps with a Napoleonic eagle on the top or some other symbol of pan-European authority, came in and said, "Let me look at your application for sheep subsidy," suspecting that we had falsely claimed for too many sheep, what would happen? Would we say, pulling the remains of our forelock, "Yes, oh great and good man from the EEC, we invite you in. Pray look at all our books," or would we say, "Pray leave our house. We much admire you, but we do not wish you to interfere in our affairs"?
Some of my constituents resent the advice that gentlemen from Customs and Excise give them about their VAT forms. I also observe that, despite all the eloquence of my about-to-be right hon. Friend from the Foreign Office in his advocacy of Gladstonian and moralistic views about foreign affairs, sadly we remain a very nationalistic nation.
I suspect that we would entirely resent any form of EEC authority. Those wicked men in Italy who so attacked the gentleman from the Court of Auditors demonstrated that if the Italians, the least nationalistic of our friends in the close family of the EEC — is not the gobbledegook good, and am I not becoming communautaire? — can behave in that manner, so long as we are in the Community we shall have frauds, evasions and growing resentment between one nation state and another at the way in which other nation states spend the money that is collected for these apparently idealistic purposes.

Mr. Leighton: The hon. Gentleman made a big point about the extra expenditure, allocated or unallocated, which could come from majority decisions. Will he comment on the words of the Prime Minister about what stuck in her gullet? Apparently what stuck in the right hon. Lady's gullet — I suspect that we shall have to wait till tomorrow to hear what she has to say about it — was that the Germans paid lip service to majority decisions, but, when it came to cutting marginally the return to their Bavarian farmers, they were prepared to veto it. So the German lip service to majority—

The Chairman: Order. Interventions should be brief, and equally they should be relevant. I find it difficult to relate any of this to the amendment. I hope that hon. Members will stick to the amendment. Mr. Budgen.

Mr. Leighton: If I may—

The Chairman: Order. I have called Mr. Budgen.

Mr. Budgen: If I may respond to the first part of the hon. Gentleman's intervention, perhaps I may then give way again because he may regard my answer as inadequate. Those are all issues that my right hon. Friend the Prime Minister will, if given the opportunity—

The Chairman: Order. We are not talking about what the Prime Minister may or may not say tomorrow or any other day. We are discussing the document COM(85)36. I hope that the Committee will stick to that.

Mr. Budgen: Exactly, Mr. Walker. We are trying to find out what allocated expenditure means. We are asking who will pay when majority decisions are taken in future. Will they be debited to allocated expenditure?

The Chairman: Order. If the hon. Gentleman can tell me where in this document, to which the amendment relates, there is reference to majority decisions in future, he may be in order, but I fail to see it. I hope that we can get back to the amendment that is before the Committee.

Mr. Budgen: While I deeply respect your decision, Mr. Walker, I am addressing all my remarks to the term "allocated expenditure." One of the great dangers of the EEC is to talk in terms of policies and objectives as though they did not cost money. We have a large number of Keynesian supporters of the EEC on this side of the Committee. By their vigour and idealism they illuminate these debates, but they always talk about policies in vacuo as though, for instance, an EEC energy policy had no cash consequences. If there are majority decisions over whatever defined area, they will have an effect upon allocated expenditure. Therefore, it is better that we should define strictly "allocated expenditure" so that majority decisions cannot extend the expenditure of the EEC. That is the limited point. I hope that in due time the Committee will be able to support the sensible amendment on this point tabled by the Labour party.

Mr. Austin Mitchell: I support the amendment which would incorporate COM (85) 36. I assume that the copy before the Committee is the final draft. It should be incorporated in the Bill because it defines the machinery for operating the Council's decisions. That machinery would define the disputed areas of allocated expenditure. It is not the most exciting, appetising or thrilling of documents but because of the definition it gives to the agreement it is essential to incorporate it in the Bill.
That is even more essential after the setback of the Milan summit. That setback was heightened by the enormous hype that the Foreign Office went in for in advance of the summit. We were told what the British achievements would be. We heard about the quiet British takeover. How odd all those headlines are now. They emphasise the subsequent failure. It might be more relevant to discuss this matter in the clause stand part debate.
The point is that we suffered a setback. Therefore, it is even more curious that the Government are proceeding at such speed with this measure when all the counsel on diplomacy and negotiation would argue for proceeding much more slowly, or dragging our feet so as to strengthen our negotiating position in subsequent discussions. The Government decided to press ahead, which was a mistake.
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Undoubtedly, the Prime Minister was let down by the way in which the Foreign Office prepared her and the Government for the Milan summit. She was made a fool of by the Foreign Office's hype and the lack of briefing about the predictable realities. It was always predictable that, at the end of the discussions, Britain, with two other maverick states, would be in a minority.
The fact that the Prime Minister was let down does not exclude the fact that her position at Milan was essentially right. She opposed the rush to revise the treaties and, effectively, the rush to a two-speed Europe. In 1975, Britain decided in a referendum to accept the treaties. Presumably, the Prime Minister's reluctance to follow the Gadarene rush to revise the treaties stems from the need to hold a referendum to make that change. Some of us argue that this legislation would justify holding a referendum. Any change in the basis of the agreement on which the Common Market rests along the lines suggested in Milan would require a referendum.
I have no doubt that these changes will go ahead, despite opposition by the British Government. We are rapidly moving towards a two-speed Europe—a first and second-class Europe in which we are the second-class passengers. The Government will eventually have to go along with this proposal because it suits their interests, whatever the legal restrictions it imposes on their decision-making power. Progress towards this end is irresistible. During that process, the usual cries will be made—"Can we afford to be left out? Should we not go along with it? Should we make more concessions? Should we prove that we are more communautaire? Should we get within the guiding nucleus?" We shall be dragged step by step along a road along which the public do not want us to go. We were initially tricked into taking this road and it is not in our interests to pursue it. Following the Milan summit, this process is almost inevitable.
We need to take a firm and clear position. If the amendment is accepted, we shall stop the remorseless process that is dragging us further down the road towards revising the treaty of Rome and towards a more powerful Community. That is why the rush to pass this legislation is extraordinary and why we on this side of the Chamber will vote for the amendment to give us a firmer, stronger negotiating position. The definition to which the amendment refers will enable us to do that. Ideally, the Government should put the Bill into cold storage. They have shown their reluctance to do so by extending the procedures and dragging their feet. The Government

should strenghten their negotiating position in future proposals. As the Government have failed to take up that stance, hon. Members must tie their hands with this amendment.

Mr. David Crouch: Does the hon. Gentleman not think that he is exaggerating when he talks about "this side of the Chamber" having to do this or that? In fact, he is supported by three hon. Members on his side of the Chamber. Is it not a bit of a cheek to the electors who elected the hon. Gentleman and other hon. Members to talk about having to hold a referendum when only three Labour Members want to support him in this momentous decision? That is a ridiculous stance.

Mr. Mitchell: The hon. Gentleman has asked me to intrude in domestic grief, which I have been doing for most of the evening. It is the domestic argument within the Conservative party which is the prime feature of our discussion. I was saying that the Opposition will vote to support the amendment. The discussion is focused primarily on the differences within the Conservative party and the hon. Member for Canterbury (Mr. Crouch) is a well-known protagonist on one side of the Community argument. He should not try to shift the consequences of the discussion between his right hon. and hon. Friends by diverting the argument and involving Opposition Members.
The amendment must be accepted because of the inadequate definition that is set out in the agreement. We must provide a firmer basis for the definition in our law than it would have if we passed the Bill as it stands.
It is clear that the Bill has an unsatisfactory title. It should have been given the title of the European Community (Refinance) Bill at the very least. My amendment, which was intended seriously, sought to change its title to the European Community's Bigger Bail Bucket Bill. Apparently that amendment was considered unworthy of appearing on the Notice Paper.

Mr. Marlow: I am grateful to the hon. Gentleman. I am sympathetic with much of what he is saying, but how will adding this particular document strengthen the Bill when-1 know that he, like me, respects the Economic Secretary to the Treasury — the Economic Secretary, in his explanatory memorandum, says in paragraph 10 on United Kingdom law:
The paper is an internal Community document which sets out a line of procedure that the Commission intends to follow in a process that is its sole responsibility.
So this particular document is at the whim of the Commission. The hon. Gentleman and his colleagues seek to put this in as part of the Bill on the basis that it will strengthen the Bill. How does it strengthen the Bill when it is a whimsical piece of nonsense in the hands of the Commission in Brussels?

Mr. Mitchell: I shall address myself to that argument in a few minutes. It is important and I wish to take it up specifically. I think that we must try to define the current whim of the Commission in our legislation so as to stop the whim changing.
As I have said, I tabled an amendment that was designed to change the title of the Bill. The amendment before us is designed to specify he contents of the bucket. The Government have been triumphant in telling us that they have secured a rebate. Apparently they expect the country to gibber with gratitude at their self-described skill


and effectiveness in securing the rebate. We are supposed to regard the Government's achievement with a kind of adulation in our eyes as alliance Members show when listening to the speeches of the right hon. Member for Plymouth, Devonport (Dr. Owen).
The Government have agreed to a fundamental shift in financial power towards Europe and towards the Commission and to give larger contributions in return. Our contributions, even after all the rebates and all the allowances, will be £973 million for 1987. That is the estimated figure on the basis of the Blue Book. We are seeing the introduction of greater contributions and a shift in power towards the Market. We are agreeing permanently to underwrite the common agricultural policy, which, despite all the vaunted limitations, which have no effect against German vetos, remains a bottomless pit.
We cannot limit expenditure on the CAP by means of the Bill, but I wish that that were possible. The enactment of such a Bill would be a field day in introducing the limitations that must be imposed on the CAP. However, we can specify the procedures by which our so-called rebate is to be decided.

Mr. Spearing: The hon. Member for Northampton, North (Mr. Marlow) used the word "whim." The document that we are discussing describes the present disposition of the Commission in relation to the calculation of the formula, which, although it may not be ideal, is at least decisive. If it is not incorporated either in the decision or the treaty, there will be some scope for its change without necessarily the agreement of the UK. That is the objective of including it in the decision.

Mr. Mitchell: Precisely, and my hon. Friend, with his knowledge of these issues, anticipates a point that I shall be emphasisng. We can specify exactly what we are doing and, as my hon. Friend pointed out in his speech, we are not getting the 66 per cent. that the Government have claimed we are getting. We are getting a rebate of 66 per cent. on the difference between the value added contribution and allocated expenditure, and the latter is inadequately defined.
Will the Economic Secretary explain whether allocated expenditure includes the £300 million a year paid to British agri-business to export food at knock-down prices to Europe? Is that part of the allocated expenditure with which we are dealing in the Bill? All that we are getting is a rebate on the difference between VAT and that allocated expenditure. It does not include the other contributions that we make, the food levies and tariffs that go directly to the EEC.
We can specify how the rebate system will work. We must specify that, whatever the Government say about this having been a permanent victory and a permanent decision on rebates. This is essentially a temporary arrangement. It lasts only for so long as the 1·4 per cent. ceiling on VAT lasts, and all indications are that that will not last long. As soon as the 1·4 per cent. ceiling is raised, our rebate system, of which the Government have made such a triumph and fetish, will be back in the melting pot with everything else.
At that time, when we come to try to extend it and even improve on it, we shall be back in a minority of one arguing in an even more difficult situation because, by

then, the other member states will be well aware of the increases in their VAT contributions which have been necessary to reduce ours. That is causing resentment already, even before the scheme comes into operation. The fact that it will be in operation at that stage will heighten that resentment and make it more difficult to get the rebate system extended.
It is, therefore, not a permanent but a temporary rebate system. For that reason we must include all the definition that we can in this piece of legislation. That is why we must include, as the amendment says, "COM(85)36" in it. The whole system can be varied by the Council and the Commission. That is my reading of the situation. Indeed, it already has been varied by the Commission. After all, the Government's explanatory memorandum on the document dealing with the method of calculation and correction defines the expenditure from which the gap will be calculated, and says:
The Fontainebleau Council agreed that the expenditure to be included in the calculation should be that 'allocated in accordance with the present criteria'. This in principle means everything that is not obviously intended for the benefit of third countries ie. development aid. In practice certain other items of expenditure have in the past been excluded because of practical difficulties in allocating them to Member States.
The Commission now proposes that those items should be included in the allocated budget, some immediately and some gradually. Therefore, even at the start of the process, it has changed the basis on which the allocation is decided. How can we trust the Commission, if it has done that already, not to make changes which will further weaken Britain's position?
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That change in the allocation system should have been strongly opposed. Why should a system that has been accepted and become almost traditional — if anything can be traditional in the Common Market — be changed by the Commission simply for the opportunistic purpose of increasing the British allocation and, therefore, decreasing the gap to be filled by the rebate system? That should have been contested, but apparently the Treasury accepted it. The 19th report of the Select Committee on European Legislation states:
The Committee understand that the calculations proposed in this instrument follows precisely the form expected following discussions with the Commission and that it meets the Government's requirements.
It was the Government's decision not to oppose the change in the allocation, and the Committee is now seeking to enforce that by specifying the inclusion of this system of adjustment in the document. Since that basis of allocation has been accepted by the Government, all that the Committee can do is to confirm the Government's decision and incorporate it in the Bill.
We must do that, because unless the document is incorporated in the Bill the Commission and the Council can change their minds. Once it has been ratified by all the member states and it is included in the final ratification by the Council, it will be accompanied by a declaration that is not binding, not by a decision that is binding. I hope that the Economic Secretary can enlighten us on this point. My understanding is that the declaration which would incorporate that machinery would not be binding in the same way as a decision, which it is now too late to get, would be binding. Therefore, it could be changed by the Commission.
The Minister might say that we can take for granted the good faith of the Commission. If we can trust the Commission, there should be no objection to the incorporation of its decision in our legislative process, thus effectively making it a condition of payment, and thus specifying the exact machinery by which payments should be made. My view, which is perhaps more cynical, is that we cannot trust the Council, because of the unpredictability of its decisions, or the Commission. We heard earlier in the debate how little we should trust the Commission's decisions when the fundamental moral decision on the scale of aid to Ethiopia has not been fulfilled. We must also accept the political position and the pressures under which the Council and the Commission will be.
Despite the increase in VAT contributions, the Community will still be in severe financial difficulties. In that position of severe financial difficulty, anything that is not essential — common agricultural policy expenditure is essential and is mounting steadily — will have to be squeezed to make way for the continual increase in CAP expenditure. The concessions made to Britain will be one area in which the squeezing process is certain to continue by the traditional method of re-jigging, recalculating and re-working the figures, trimming the concession by administrative decision. In resisting that process we are as popular as the man in the Amplex advert. That is the sort of influence we have on the councils of the Commission.
I do not trust the Commission or the Council which may well change the arrangement; therefore it is important to incorporate it in our law. The amendment would provide the legal basis to object to any change in the machinery that the Government have accepted. On that basis, we are seeking to ratify the Government's decision and incorporate it in our legislation. Once it is incorporated in our law it cannot be changed, because that is the condition on which we are making the payment in the first place, and it is certainly the basis for an objection in the court to any attempt to change it.
The amendment is vital because the process of change is going on apace in Europe and the pattern of that change is against us. We are not in a strong position in the EC. We are a natural and inevitable minority in an institution that does not suit us. As we are constantly trying to improve the inadequate terms on which we joined the EC, and to redress the difficulties that we have faced, we are always negotiating from a position of weakness. Therefore, it is always difficult to get changes made. We are not beneficiaries from the CAP in the way that the other member states are.
The whole tenor of the debate in Milan has been to underline our inevitable minority position of difficulty. In that position we need all the strength and legal clarity and all the firm negotiating positions that we can get. That is the reason for the amendment. We can always be communautaire, as the Euro-enthusiasts would like us to be. Indeed, the Foreign Office, which is the prime home for the Euro-enthusiasts, would like us to be cornmunautaire and to lie on our back and be tickled by the toe of the Common Market, but that should not be the position of this House. We should seek to get the existing agreement incorporated in our legislation. It is no use expecting that political decisions will not be changed in directions that are unfavourable to us. We can oppose that process by incorporating the Commission's own decisions—accepted by the Government — in the clause.

Sir Richard Body: There have been some cogent arguments in favour of the amendment, in particular from the hon. Member for Great Grimsby (Mr. Mitchell). I hope that by now the Minister has been persuaded that we must have firmer provisions in the Bill.
In the past there have been many misunderstandings. My hon. Friend the Member for Canterbury (Mr. Crouch) and I were once shoulder to shoulder in agreement. Years ago we argued together in favour of Britain being in the Community. We then hoped that there would not be perpetual bickering and misunderstanding, nearly always about money. It has not advanced the cause of European unity, as the Minister knows only too well. Therefore, it is essential that our position should be made absolutely clear. It is not good enough for the Foreign Office to say that we are among friends.
My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) talked about Disraeli. I shall go further back to Palmerston, who said that a nation did not have friends: it only had interests. I sometimes wish that the Foreign Office would remember those words. They were said when only two or three clerks were employed in the Foreign Office. The Foreign Office was then a great deal more effective not just on the world stage but in looking after our wider interests than some of us believe it is today. It is in our interest to be part of Europe and to try to solve a number of problems with our European partners.
There are two points where there will be trouble in the next few years if we do not get the Bill right. My hon. Friend the Member for Mid-Worcestershire (Mr. Forth) has been an almost lone voice with his warnings about what might happen when Spain and Portugal enter the Community. I visited those two countries not long ago with the Select Committee on Agriculture. I applaud and support everything that my hon. Friend has warned the House about, argued about elsewhere and written in articles.
I do not believe that we have realised what the cost of Spain and Portugal's entry will be. That does not relate solely to the common agricultural policy. We shall be doing things to Portugal which will cause great damage to that country's economy. We shall then need more money — not for the common agricultural policy because that will not help Portugal — for the regional and social funds to prevent an increase in unemployment among those Portuguese farmers who will be driven off the land as a result of the common agricultural policy.
We understand that one of the reasons why we seek to bring in Spain and Portugal is to strengthen their role in Western Europe and to make them more certain NATO partners. If they become impoverished and have increased unemployment, in addition to the 30 per cent. rate of inflation that they now have, that will not make them suitable NATO allies. That is why my hon. Friend was correct to say that we have not correctly understood the great burden that will be placed upon us and upon Portugal when Spain and Portugal enter the Community.
We must be ready to advance a great deal more money to Portugal—a great friend of ours, as we are all aware—to enable it to play its part in the Community.
The story of Spain is different. There will undoubtedly be an added cost to the common agricultural budget as a result of Spain's admission to the Community.
I am also worried about development aid. My hon. Friend the Minister has given us the explanatory


memorandum. If I understand it correctly, development aid is secluded. In the allocation of the budget there may be items of development aid which will not be considered under the Bill. In the past 12 months there has been a considerable increase in public interest in the Third world. At the same time, we have been growing angry about the mounting wheat surplus. All of us in the House know that under the common agricultural policy we cannot hand over the wheat, maize or those other commodities that could be eaten in those countries where there is starvation. Those items must come under a different heading in the Community budget. I understand that they will not be affected by the Bill. It seems that there is likely to be another bumper harvest this year, and we already have millions of tonnes of surplus wheat. If we have still more, there will be a demand that some of it go in development aid to countries which need it. The explanatory memorandum says that such expenditure would be outside the allocated budget.
Those two areas are in danger of causing trouble, bickering, ill feeling and accusations of bad faith. We have had that for 20 years now and if we want genuine progress towards European co-operation, we must take every step to prevent matters getting worse. I therefore support the amendment and hope that my hon. Friend will be good enough to accept it.

Mr. Aitken: Like my hon. Friend the Member for Holland with Boston (Mr. Body), I shall be brief, not least because we should move on to the important group of amendments that my right hon. Friend the Member for Worthing (Mr. Higgins) intends to introduce.
This has been a useful debate because, at the heart of the amendment lies the worry that the so-called permanent arrangements for rebates and abatements is impermanent. Several hon. Members have drawn attention to the fact that we are already spending 1·35 per cent. of own resources and that it does not take much of a push to reach the 1·4 per cent. limit. Once we are over that limit, the whole edifice of these abatements and rebates is in jeopardy.
My hon. Friend the Economic Secretary to the Treasury seemed recently to suggest that even the weather might push expenditure over the 1·4 per cent. limit. If the basis of these arrangements is that shaky, we must get something more certain. Certainty is the one thing that we lack in much of the Bill and in many of the calculations. The Bill should be called the European Communities (Temporary Finance) Bill. The arrangements are built on sand, or rather quicksand in view of the conflicting statements on the Government's explanatory memorandum and the Commission's document.
The explanatory memorandum honestly states the truth. It says that there will be no impact on United Kingdom law and that:
The paper is an internal Community document which sets out the line of procedure the Commission intends to follow in a process that is its sole responsibility.
In plain English, we have to trust the Commission. Trusting the Commission, however, is the triumph of hope over experience.
My hon. Friend the Member for Southend, East (Mr. Taylor) drew attention to the fact that the Commission's assurances that the quantity of food being sold cheap to the

Soviet Union and its satellites would be reduced have proved worthless. My hon. Friend the Member for Mid-Worcestershire (Mr. Forth) mentioned the unreliability of the Italians. It is a fallacy to say that we can treat the Commission as a rock on which all calculations can be based.
In addition to the already doubtful and shaky basis for our calculations, we have had the dramatic events of the past 48 hours at the Milan summit. I suppose that a good communautaire figure would say that the situation is now movementé. After those convulsive changes and extraordinary disagreements, how can we possibly put trust in the Council of Ministers or the Commission itself as being a firm, rocklike structure on which calculations on Britain's level of contributions and abatement can be based? Therefore, my plea is that what is needed above all, with regard to the amendment, is not a sentiment of Foreign Office good will—"Trust the Community"—but a firm legal basis. If there is a row, can we go to court? At the moment, the answer seems to be definitely no.
What we are after is certainty. In later amendments, we are after limits. I noticed the other day that my hon. Friend the Member for Watford (Mr. Garel-Jones), who seems to be wearing a more anxious expression than usual on his normally cherubic countenance, was reported as saying words to the effect that the rebellion on the Bill would not amount to very much because it would be just the usual few old lags. I say to my hon. Friend that the old lags may be few in number — not that that has ever mattered in this place, because, as Burke said, one man with conviction makes a majority — but the few old lags are being joined by a great and powerful ally. The title of that ally is the march of important events. The events at Milan have shown the Government's vague, hopeful, optimistic sentiments to be quite worthless.
I am sorry that the point of order at the beginning of the debate was not decisively accepted, although a broad hint was dropped by the Chair that it might be accepted. We are debating those hoped-for certainties in a vacuum when as a result of the Milan summit nothing is certain in the Common Market any more. We have chaos and confusion. The whole institution is in disarray. If, despite all that chaos, we say that we can be absolutely certain that our little abatement arrangements will be rock solid, that is dangerous nonsense. That is why the Opposition amendment deserves the support of the whole House.

Dr. Oonagh McDonald: We have had an important debate on an amendment which, at first sight, looked as if it were simply a technical amendment. The Economic Secretary's article in The Times of 25 June will give us the reasons for the doubts. In that article he says:
Britain's abatements are now entrenched into the Community's financial legislation and cannot be changed without our agreement.
When we began to look at that, we realised that that was not clear in the Bill, so it was necessary to include the abatement document as part of the Bill. Therefore, our amendment makes that abatement mechanism legally binding.
On further examination, the following question arises: who can change the abatement mechanism? From the Select Committee's report it is clear that the Committee considered, on its examination of the document,
that the Commission could not vary its terms without reference to the Council.


That is stated on page 8 of the 19th report. The Committee then notes the unusual status of that document and concludes that the communication — the consultative document to which we have referred in the debate — may be seen as
additional help to Member States in understanding the Decision rather than a matter of formal necessity.
When we look at the explanatory memorandum provided by the Economic Secretary, which has been much quoted in the debate, it appears that the abatement mechanism is a procedure for the Commission alone. The debate has brought that uncertainty clearly to light. Hon. Members on both sides of the House have contributed to that. The Economic Secretary must tell us clearly who can change the abatement mechanism. That is in doubt from an examination of his explanatory notes, the report of the Select Committee on European Legislation, and even of the document which, regarding the allocation or exclusion of expenditure, on page 3 states:
similar measures … will be excluded by Council decision.
Annexe 3, table 2, to which an earlier part of the document directs us, refers to expenditure still to be allocated and expenditure to be excluded by chapter. It talks about chapters to be incorporated immediately by the Commission. Even in that consultative document, 5046/85, there appears to be some confusion about who is meant to take what decisions. The Economic Secretary must answer that question this evening. Unless that matter is sorted out, he cannot say, as he said in his article in The Times, that
Britain's abatements are now entrenched into the Community's financial legislation and cannot be changed without our agreement.
Hon. Members have rightly referred to the Milan summit, the way it ended and the future. Today's leader in the Financial Times makes the point clear when it states:
Mrs. Thatcher must now rethink her position. Since she attaches great importance to the liberalisation of the Community's internal market and the removal of all national barriers to trade, it is essential to reach agreement on how the necessary decisions are to be taken. This means that she must reach an accommodation on the constitutional issues with the majority of the member states, on political as well as practical grounds.

I wish to emphasise the phrase
how the necessary decisions arc to be taken.
If decisions are to be taken by majority voting in future, because of the collapse of the Milan summit and all the acrimony, anger and hostility which that generated, and if the Council can alter the abatement mechanism or decide what counts as allocated expenditure and what does not, that could be taken by a majority decision and we could, presumably, be voted down. The issue of who takes what decisions is of crucial importance. The Economic Secretary must answer that question.
The reduction in our contributions has been expressed misleadingly. The agreement reached at Fontainebleau provides for a refund of 66 per cent. of the difference between the United Kingdom's VAT share payment to the allocated budget and its receipts from the allocated budget. Yet if we apply the Fontainebleau mechanism to our 1982–83 payments, the figure would not be 66 per cent., but 58 per cent. in 1982 and 52 per cent. in 1983. The reason for that is that the Commission has decided that some, if not all, of our payments of agricultural levies and customs duties count as payments to the Community. The 66 per cent. figure is therefore misleading and suggests that our refunds from the Community will be better in the future. In fact, our net payments to the Community will increase to reach almost £1 billion in 1987–88, as the Government's own public expenditure White Paper shows.
Not only have we an abatement mechanism which now looks insecure and subject to change but the position has been presented by the Government in a misleading fashion suggesting that we shall do better in the future—

It being Ten o'clock, the Chairman left the Chair to report Progress and ask leave to sit again.

Committee report Progress.

BUSINESS OF THE HOUSE

Ordered,
That, at this day's sitting, the European Communities (Finance) Bill and the Further Education Bill [Lords] may be proceeded with, though opposed, until any hour. — [Mr. Garel-Jones.]

Orders of the Day — European Communities (Finance) Bill

Again considered in Committee.

Question again proposed, That the amendment be made.

Dr. McDonald: Not only have our future refunds from the Community been presented in a misleading fashion so that it looks as though we have obtained a much better deal than we really have, but it now seems that the abatement mechanism itself is far more insecure and subject to change than we at first thought and certainly cannot be described, as the Economic Secretary would have us believe, as being entrenched in Community legislation.
I beg the House to support the amendment because only in this way can we have any certainty about the abatement mechanism in the future. I suspect that it will soon come under pressure as Community spending continues to rise and that the 1·4 per cent. ceiling will be raised to 1·6 per cent. before January 1988. We want the document referred to in the amendment to be part of the Bill so that it will be legally binding. We must also insist that the Economic Secretary clarify the issue of who can change the abatement mechanism and whose agreement must be sought.

Mr. Ian Stewart: It may be for the convenience of the Committee if I concentrate on those parts of the debate relating to the abatement mechanism and the method of calculation rather than on the wider questions that have been raised.
The own resources decision, which is the first limb of clause 1, provides for an automatic abatement system which builds the reduction of the United Kingdom contribution to the European Community budget into a lasting and automatic system. As I have said on a number of occasions, it will be entrenched in the laws of the Community. I shall explain in a moment how that comes about.
This is a very important change, because in the past we have had to negotiate with great difficulty, year after year, to obtain refunds on the expenditure side of the budget. This often involved long and difficult negotiations with other Ministers in the Council, as well as causing difficulties with the European Parliament, and on a number of occasions we have had great difficulty achieving repayment.

Mr. Terence Higgins: Will my hon. Friend give way?

Mr. Stewart: I shall give way in a moment. Despite the difficulties, however, we have achieved refunds of £2,500 million since 1980–81. I was about to say that that is more than the Labour Government achieved, but there is no need for me to say that, because the Labour Government achieved nothing at all. For the first few years of our membership of the Community we were protected by the transitional arrangements negotiated by the Labour Government.

Mr. Higgins: Will my hon. Friend give way?

Mr. Stewart: I shall give way in a moment. In 1975, the then Labour Government said that they had invented and agreed with the Community a wonderful financial mechanism to protect our budget position.

Mr. Budgen: On a point of order, Sir Michael.

Mr. Stewart: I shall give way in a moment, but I wish to make these points first.

Mr. Budgen: On a point of order, Sir Michael. Will you give my hon. Friend some guidance about referring to the whole series of negotiations?

The Temporary Chairman (Sir Michael Shaw): I am not here to give guidance to the Minister.

Mr. Budgen: I am sorry, Sir Michael, but I may have used the wrong word. Will you kindly rule on whether my hon. Friend's submissions about the bad deals done by the Labour Government are in any way relevant to the consideration of the deal done by the present Government?

The Temporary Chairman: Hon. Members are responsible for what they say.

Mr. Stewart: I am sorry that my hon. Friend should be so anxious to prevent me from pointing out the gross failure of the Labour party in dealing with European Community business.
Ten years ago the then Prime Minister, now Lord Wilson of Rievaulx, came to this House after agreeing the financial mechanism and said:
The arrangements which the Community has now agreed would, if Britain remains a member of the EEC, give us an assurance of a repayment of hard cash if we found ourselves in the future paying an unfair share of the Community budget."—[Official Report, 12 March 1975; Vol. 888, c. 511.]
That agreement produced absolutely nothing for the United Kingdom. I contrast that with the achievement of this Government, who by agreement with other member states have introduced the abatement system which is being proposed and ratified by the Bill.

Mr. Higgins: In his opening remarks my hon. Friend referred to the relationship between the increase in VAT to 1·4 per cent. and the abatement mechanism. May I refer him—I understand that it is based on the Fontainebleau agreement—to paragraph 4 of the conclusions of the presidency, which states:
The correction formula … will be part of the decision to increase the VAT ceiling to 1·4 per cent., their durations being linked".
From that it would seem to follow that if the ceiling went up to 1·6 per cent. the abatement would no longer remain, as that duration is linked only to the increase to 1·4 per cent. Will my hon. Friend elucidate that point?

Mr. Stewart: Indeed, I can. My right hon. Friend is right to draw attention to the fact that the duration of the abatement and the duration of the 1·4 per cent. ceiling are linked. The 1·4 per cent. ceiling remains in force until such time as it is changed by the unanimous agreement of all member states, including the United Kingdom, and until it is ratified by the national procedures of the Parliaments of all the member states, including the House of Commons. For the purposes of our abatement, that will continue until the House of Commons decides that it wishes to change it.

Mr. Marlow: My hon. Friend will be aware of the heavy news coverage since the weekend of the goings on at Milan, particularly over the possibility of majority voting. Is he saying categorically that whatever happens subsequent to Milan and to this conference, and whatever happens with regard to majority voting, we will not go beyond 1·4 per cent. without the consent of the House of Commons?

Mr. Stewart: I am saying categorically to my hon. Friend and the Committee that the own resources decision and the intergovernmental agreement were not on the agenda for Milan. They are free-standing in their present form, and under the Bill they will be established into the law of the Community. It would take a decision of the House of Commons, in conjunction with decisions of all other member states, to change those arrangements.
A number of these questions are more relevant to the next group of amendments, and it would therefore be better if I concentrated on those parts of the debate which touched on matters relating to the abatement and the document mentioned in the amendment.

Mr. Forth: Has my hon. Friend had the opportunity since we discussed this matter last week further to consider whether the Government are prepared to give the Committee an undertaking that the Government will not request, or indeed allow, any increase beyond the 1·4 per cent. VAT ceiling? Is he prepared to give us a simple reassurance, which would give many of us further thought about the matter? I ask for it in the context of his assurances, which we shall debate later, on budget discipline.

Mr. Stewart: I am sorry that my hon. Friend did not listen to the response that I made to my right hon. Friend the Member for Worthing (Mr. Higgins), which was that these are much more properly matters for the next group of amendments. If the Committee, as I hope, would like me to deal with the point raised on the abatement mechanism, I shall do so.
I can assure the hon. Member for Newham, South (Mr. Spearing) that although the VAT rate formula is expressed in terms of the VAT percentage, it covers the whole of the budget. Let us say that 21 per cent. of the budget is represented by the United Kingdom's VAT contribution and, for the sake of argument, that approximately 14 per cent. of the budget is represented by payments to the United Kingdom. That is a difference of 7 per cent. It is that figure of our contribution that is subject to the abatement, and it includes the revenue levies and duties. The only difference is that the levies and duties may be greater than the 20 to 21 per cent. which is known as the excess levies and duties.
The hon. Member for Newham, South also mentioned the rate of VAT. The 1 per cent. ceiling which currently applies is calculated on a notional base which is not related to the actual take of VAT in individual member states. It is on the harrnonised base and leaves out of account whether a particular country has a zero rate, as we do with a number of our expenditures.
The hon. Gentleman asked me about the percentage and the 1·35 per cent. ceiling mentioned in the preliminary comments about next year's budget. The answer to that is that the average rate, if it were all paid at a uniform basis by all member states, is about 1·24 or 1·25 per cent. For the United Kingdom's rate to be below 1 per cent., at about 0·8 per cent., there has to be an increase in the amount paid by other member states, which would be about 1·35 per cent. That is the mathematical position on abatement in the coming year.

Mr. Spearing: I am grateful that the hon. Gentleman has confirmed, more or less, the figure that I have of 1·25 per cent., according to Agence Europe. Does he agree that his article in The Times was misleading, because the

proper comparison would have been 1·24 with 0·8 per cent? We would not have to pay the 1·35 per cent., because that is the enhanced VAT rate arising out of the rebate. Therefore, the hon. Gentleman should have quoted 1·24 and not 1·35 per cent. in his article.

Mr. Stewart: It would have been misleading if, in the article, I had suggested that other member states were paying 1·24 or 1·25 per cent., when they were paying 1·35 per cent., which is the figure that I mentioned. As all other member states, with the exception of Germany, would be paying at that rate, it is proper to quote that figure as the financial effect.

Mr. Budgen: I am surprised to find my hon. Friend referring yet again to this proposed budget, because, I remind him, when I asked him about this last week in the money resolution debate and on Second Reading he said that he was not able to answer the question about the 1986 budget because
it has not yet been published".—[Official Report, 25 June 1985; Vol. 81, c. 878.]
My hon. Friend said that he could not respond to my question. It was as though it were improper to refer to the draft 1986 budget. Can my hon. Friend help the House about this? Is he behaving like a latter-day European Dalton, or are we allowed to discuss the budget?

Mr. Stewart: What we are allowed to discuss, Mr. Walker, is in your hands. What I was saying was in response to the questions put to me by the hon. Member for Newham, South about the comments which had been made by the Commission about its forthcoming preliminary draft budget for 1986. If my hon. Friend asks me questions about the preliminary draft budget, I am not yet able to answer them because the preliminary draft budget has not been published and is not available to the Government. What is available to the hon. Member for Newham, South, and what he has asked me about, are some figures put out by the Commission indicating what would be in the budget so far as it affected the contributions of different member states. I hope that what I have said helps elucidate the questions that the hen. Gentleman raised about that.
As for the general question of the allocated budget and the Commission document, perhaps I may be allowed to answer a number of questions asked by hon. Members, including Opposition Front Bench Members, about the nature of this document COM 85/36. It derives from article 3 of the own resources decision. In its first part it defines the gap and the abatement for the mechanism. In the second part it deals with the correction.
This is a Commission working document, which was approved by the Council. It is not a Council agreement. It is not an agreement between the member states of the Community, and as such it would be quite inappropriate to treat it as a treaty or as such an agreement of a kind which it is not.
The legal instrument involved is the own resources decision itself, and that requires national procedures for ratification. It also requires consultation with the European Parliament before it is put to member states. But under the ORD it is stated that the Commission is responsible for making the calculations in paragraph 3(5). The Commission then sets out in this document COM 85/36 the way in which it proposes to deal with the figures.
Those terms are entirely acceptable to the United Kingdom. As the document explains, the allocated budget should be as much as possible of the expenditure of the Community as can be allocated between member states, and that basically excludes payments to third countries, of which the main element is foreign aid. My hon. Friend the Member for Holland with Boston (Mr. Body) raised this question. That is not changed under the proposals.
I was also asked what would be the position if the Commission wished to change these proposals. The Commission is charged under the own resources decision to implement the terms of that decision. If the Council, or if any member state, felt that the Commission was not implementing those terms, it would be open to it to take the Commission to court and to test before the court whether the Commission was properly carrying out the decision in the ORD which it was charged to do. That is the basis of the legal arrangement.

Mr. Taylor: This is the whole point of the debate. Where is there any reference in the own resources decision which would make it unlawful for the Commission or the Council of Ministers to change the definition of allocated expenditure and thereby to produce an even worse financial position for the United Kingdom? The basic point of the debate is whether there is anything in the own resources decision which would prevent the Commission from changing the basis of allocated expenditure.

Mr. Stewart: The Commission has undertaken to follow the Fontainebleau agreement in allocating as much as possible of the budget. That happens to be in the interests of the United Kingdom and not against them, as some of my hon. Friends seem to imagine.
I draw the Committee's attention to a part of the report of the Select Committee which the hon. Member for Newham, South did not quote. His Committee said:
The Committee are also advised that the content of the Communication as presented is not such that it would be appropriate for inclusion in the Own Resources Decision itself since it is both discursive (in explaining the reasons for applying certain criteria in the form agreed) and illustrative (by way of theoretical examples of the calculations needed). The Committee also note that the Own Resources Decision is such that no supplementary instrument, of the type provided here, was in fact necessary. To that extent, this Communication may be seen as additional help to Member States in understanding the Decision rather than a matter of formal necessity.
I agree with the Select Committee.

Mr. George Robertson: The Minister seems to have glided over a point made repeatedly by hon. Members. His explanatory memorandum to this discursive document which he is now putting to one side is absolutely clear. It says that the paper is an internal Community document which sets out a line of procedure which the Commission intends to follow in a process which is its sole responsibility. The Minister has indicated that the hon. Member for Southend, East (Mr. Taylor) is suggesting a course which would be beneficial to the United Kingdom. What if the Commission made a decision which was detrimental to the United Kingdom? Does it have the power to do so?

Mr. Stewart: If the hon. Gentleman had been listening, he would have heard me explain that if the Council or any member state had reason to think that the

Commission was not carrying out what it was charged to do under the own resources decision, that could be challenged in the courts.
The point about the document is that it is not an agreement between member states, nor an agreement of the Council. Therefore, it is not appropriate to include it as a treaty. It would be legally meaningless for us to include it in the Bill as a Community treaty. It would bind no one. It would not bind us, other member states or the Commission. Therefore, I call upon the Committee to reject the amendment.

Question put, That the amendment be made:—

The Committee divided: Ayes 75, Noes 267.

Division No. 253]
[10.21 pm


AYES


Aitken, Jonathan
Leighton, Ronald


Archer, Rt Hon Peter
McDonald, Dr Oonagh


Atkinson, N. (Tottenham)
McKelvey, William


Barnett, Guy
McNamara, Kevin


Beckett, Mrs Margaret
McTaggart, Robert


Bennett, A. (Dent'n &amp; Red'sh)
Madden, Max


Blair, Anthony
Marek, Dr John


Body, Richard
Marshall. David (Shettleston)


Boothroyd, Miss Betty
Maynard, Miss Joan


Brown, Gordon (D'f'mline E)
Michie, William


Brown, Hugh D. (Provan)
Mitchell, Austin (G't Grimsby)


Buchan, Norman
Moate, Roger


Budgen, Nick
O'Neill, Martin


Caborn, Richard
Patchett, Terry


Campbell, Ian
Pavitt, Laurie


Clark, Dr David (S Shields)
Powell, Rt Hon J. E. (S Down)


Clarke, Thomas
Proctor, K. Harvey


Cocks, Rt Hon M. (Bristol S.)
Randall, Stuart


Cohen, Harry
Rees, Rt Hon M. (Leeds S)


Conlan, Bernard
Roberts, Allan (Bootle)


Craigen, J. M.
Robertson, George


Deakins, Eric
Shepherd, Richard (Aldridge)


Dobson, Frank
Silkin, Rt Hon J.


Douglas, Dick
Skinner, Dennis


Dover, Den
Smith, C.(Isl'ton S &amp; F'bury)


Duffy, A. E. P.
Snape, Peter


Dunwoody, Hon Mrs G.
Spearing, Nigel


Evans, John (St. Helens N)
Stott, Roger


Fields, T. (L'pool Broad Gn)
Taylor, Rt Hon John David


Fisher, Mark
Taylor, Teddy (S'end E)


Foster, Derek
Thompson, J. (Wansbeck)


Gilbert, Rt Hon Dr John
Tinn, James


Golding, John
Weetch, Ken


Gourlay, Harry
White, James


Hamilton, James (M'well N)
Winnick, David


Hogg, N. (C'nauld &amp; Kilsyth)



Hughes, Robert (Aberdeen N)
Tellers for the Ayes:


Janner, Hon Greville
Mr. John Maxton and


Kaufman, Rt Hon Gerald
Mr. Frank Haynes.


Lambie, David



NOES


Alexander, Richard
Best, Keith


Alison, Rt Hon Michael
Biffen, Rt Hon John


Alton, David
Blackburn, John


Amery, Rt Hon Julian
Blaker, Rt Hon Sir Peter


Amess, David
Bonsor, Sir Nicholas


Ancram, Michael
Bottomley, Mrs Virginia


Arnold, Tom
Bowden, A. (Brighton K'to'n)


Ashby, David
Bowden, Gerald (Dulwich)


Aspinwall, Jack
Boyson, Dr Rhodes


Atkins, Rt Hon Sir H.
Brandon-Bravo, Martin


Atkins, Robert (South Ribble)
Bright, Graham


Baker, Rt Hon K. (Mole Vall'y)
Brooke, Hon Peter


Baker, Nicholas (N Dorset)
Browne, John


Baldry, Tony
Bruce, Malcolm


Banks, Robert (Harrogate)
Bruinvels, Peter


Beaumont-Dark, Anthony
Bryan, Sir Paul


Bellingham, Henry
Buchanan-Smith, Rt Hon A.


BendaII, Vivian
Buck, Sir Antony


Benyon, William
Burt, Alistair






Butcher, John
Hayhoe, Rt Hon Barney


Butler, Hon Adam
Hayward, Robert


Butterfill, John
Heathcoat-Amory, David


Carlisle, Kenneth (Lincoln)
Heddle, John


Carlisle, Rt Hon M. (Wton S)
Henderson, Barry


Carttiss, Michael
Hickmet, Richard


Cash, William
Hind, Kenneth


Chalker, Mrs Lynda
Hirst, Michael


Chapman, Sydney
Hogg, Hon Douglas (Gr'th'm)


Chope, Christopher
Holland, Sir Philip (Gedling)


Churchill, W. S.
Hordern, Sir Peter


Clark, Hon A. (Plym'th S'n)
Howard, Michael


Clark, Dr Michael (Rochford)
Howell, Rt Hon D. (G'ldford)


Clark, Sir W. (Croydon S)
Howell, Ralph (N Norfolk)


Clarke, Rt Hon K. (Rushcliffe)
Hubbard-Miles, Peter


Clegg, Sir Walter
Hunt, David (Wirral)


Colvin, Michael
Hunt, John (Ravensbourne)


Coombs, Simon
Hunter, Andrew


Cope, John
Hurd, Rt Hon Douglas


Couchman, James
Irving, Charles


Cranborne, Viscount
Jenkin, Rt Hon Patrick


Critchley, Julian
Jones, Robert (W Herts)


Crouch, David
Joseph, Rt Hon Sir Keith


Currie, Mrs Edwina
Kellett-Bowman, Mrs Elaine


Dickens, Geoffrey
Kershaw, Sir Anthony


Douglas-Hamilton, Lord J.
Key, Robert


Dunn, Robert
King, Roger (B'ham N'field)


Durant, Tony
King, Rt Hon Tom


Evennett, David
Knight, Greg (Derby N)


Eyre, Sir Reginald
Knight, Dame Jill (Edgbaston)


Fallon, Michael
Knowles, Michael


Forman, Nigel
Knox, David


Forsyth, Michael (Stirling)
Lamont, Norman


Fowler, Rt Hon Norman
Lang, Ian


Franks, Cecil
Lawrence, Ivan


Fraser, Peter (Angus East)
Lawson, Rt Hon Nigel


Freeman, Roger
Lee, John (Pendle)


Gale, Roger
Leigh, Edward (Gainsbor'gh)


Galley, Roy
Lennox-Boyd, Hon Mark


Gardiner, George (Reigate)
Lewis, Sir Kenneth (Stamf'd)


Garel-Jones, Tristan
Lightbown, David


Gilmour, Rt Hon Sir Ian
Lilley, Peter


Glyn, Dr Alan
Lloyd, Ian (Havant)


Goodlad, Alastair
Lloyd, Peter, (Fareham)


Gow, Ian
Lord, Michael


Gower, Sir Raymond
Lyell, Nicholas


Grant, Sir Anthony
McCurley, Mrs Anna


Greenway, Harry
Macfarlane, Neil


Gregory, Conal
MacKay, Andrew (Berkshire)


Griffiths, Sir Eldon
MacKay, John (Argyll &amp; Bute)


Ground, Patrick
McNair-Wilson, P. (New F'st)


Grylls, Michael
McQuarrie, Albert


Gummer, John Selwyn
Madel, David


Hamilton, Hon A. (Epsom)
Major, John


Hannam, John
Malins, Humfrey


Harris, David
Malone, Gerald


Harvey, Robert
Mates, Michael


Haselhurst, Alan
Maude, Hon Francis


Havers, Rt Hon Sir Michael
Mawhinney, Dr Brian


Hayes, J.
Mayhew, Sir Patrick





Mellor, David
Shepherd, Colin (Hereford)


Merchant, Piers
Shersby, Michael


Meyer, Sir Anthony
Silvester, Fred


Mills, Iain (Meriden)
Sims, Roger


Miscampbell, Norman
Skeet, T. H. H.


Mitchell, David (NW Hants)
Soames, Hon Nicholas


Monro, Sir Hector
Speed, Keith


Montgomery, Sir Fergus
Spencer, Derek


Morris, M. (N'hampton, S)
Spicer, Jim (W Dorset)


Morrison, Hon C. (Devizes)
Spicer, Michael (S Worcs)


Moynihan, Hon C.
Stanbrook, Ivor


Mudd, David
Steel, Rt Hon David


Neale, Gerrard
Steen, Anthony


Needham, Richard
Stern, Michael


Nelson, Anthony
Stevens, Lewis (Nuneaton)


Neubert, Michael
Stewart, Allan (Eastwood)


Newton, Tony
Stewart, Ian (N Hertf'dshire)


Nicholls, Patrick
Stradling Thomas, J.


Normanton, Tom
Sumberg, David


Norris, Steven
Tapsell, Sir Peter


Onslow, Cranley
Taylor, John (Solihull)


Oppenheim, Phillip
Tebbit, Rt Hon Norman


Oppenheim, Rt Hon Mrs S.
Temple-Morris, Peter


Ottaway, Richard
Thomas, Rt Hon Peter


Page, Richard (Herts SW)
Thompson, Donald (Calder V)


Parris, Matthew
Thompson, Patrick (N'ich N)


Patten, Christopher (Bath)
Townend, John (Bridlington)


Patten, J. (Oxf W &amp; Abdgn)
Townsend, Cyril D. (B'heath)


Pawsey, James
Trippier, David


Peacock, Mrs Elizabeth
Trotter, Neville


Percival, Rt Hon Sir Ian
Twinn, Dr Ian


Pollock, Alexander
van Straubenzee, Sir W.


Portillo, Michael
Vaughan, Sir Gerard


Powell, William (Corby)
Viggers, Peter


Powley, John
Waddington, David


Price, Sir David
Wainwright, R.


Raison, Rt Hon Timothy
Wakeham, Rt Hon John


Rathbone, Tim
Waldegrave, Hon William


Rees, Rt Hon Peter (Dover)
Walden, George


Renton, Tim
Walker, Rt Hon P. (W'cester)


Rhodes James, Robert
Wallace, James


Rhys Williams, Sir Brandon
Waller, Gary


Ridley, Rt Hon Nicholas
Walters, Dennis


Ridsdale, Sir Julian
Wardle, C. (Bexhill)


Rifkind, Malcolm
Watson, John


Roe, Mrs Marion
Watts, John


Rossi, Sir Hugh
Wells, Bowen (Hertford)


Rost, Peter
Wells, Sir John (Maidstone)


Rowe, Andrew
Whitney, Raymond


Rumbold, Mrs Angela
Wolfson, Mark


Ryder, Richard
Wood, Timothy


Sackville, Hon Thomas
Yeo, Tim


Sainsbury, Hon Timothy



St. John-Stevas, Rt Hon N.
Tellers for the Noes:


Sayeed, Jonathan
Mr. Robert Boscawen and


Shaw, Giles (Pudsey)
Mr. Carol Mather.


Shelton, William (Streatham)

Question accordingly negatived.

Mr. Higgins: I beg to move amendment No. 6, in page 1, line 9, after 'resources', insert
'so however that the maximum VAT rate paid by the United Kingdom shall not exceed 1 per cent. so long as the 1·4 per cent. maximum rate fixed by the decision remains in force'.

The Chairman of Ways and Means (Mr. Harold Walker): With this it will be convenient to take the following amendments: No. 7, in line 9, after 'resources', insert
'only until such time, after 31st December 1985, as the United Kingdom net budgeted contributions shall exceed £500 million for the subsequent year.'
No. 8, in line 9, after 'resources', insert
'and increasing the maximum rate of mobilisation of value-added tax own resources to 1· per cent. on the clear understanding that this maximum rate will not be increased to 1·6 per cent. for the next 10 years'.
New clause 12 — Parliamentary control of further increases in value-added tax mobilisation
'For the avoidance of doubt, it is hereby declared that any further increase in the maximum rate of mobilisation of value-added tax own resources shall be subject to the consent of Parliament.'.
New clause 16 — Further increases in maximum value-added tax rate
'This Act does not provide authority for Her Majesty's Government to make any binding commitment on a further increase of the value-added tax maximum rate to 1·6 per cent. until the national procedures referred to in the preamble to the Decision have been completed by Parliament.'.

Mr. Higgins: The Committee will appreciate that the amendment stems from the statement made in the explanatory memorandum that the maximum United Kingdom VAT rate is expected to remain 1 per cent. throughout the life of the 1·4 per cent. ceiling.
The crucial point is that the Explanatory and Financial Memorandum refers only to the fact that our contribution is expected to remain below 1 per cent. Moreover, the Explanatory and Financial Memorandum does not form part of the Bill. There may be an argument, therefore, for making the position clear in the measure.
A feature of the negotiations in the EEC — and, indeed, of the various documents that have been presented to the House—has been the unsatisfactory nature of the documentation. That seems even to have penetrated the printing of Bills here, for several copies that I have secured either have the Explanatory and Financial Memorandum but not the Bill or the Bill and not the Explanatory and Financial Memorandum. Instead of it being a two-page Bill, some versions of it run to four pages.
The unsatisfactory nature of the documentation was raised by the Select Committee on the Treasury and Civil Service. In particular, we drew attention to that in relation to the report on the Fontainebleau agreement. Many of the issues which we have discussed on Second Reading and in Committee stem from that agreement.
The Select Committee discovered the extraordinary fact that there appeared to be no definitive text of the Fontainebleau agreement. Indeed, we drew attention to the fact that the communiqué so-called apparently had been issued simply on the authority of the presidency, and it transpired from the evidence we took that some of the matters to which the presidency said the United Kingdom had agreed had not, in fact, been agreed to by the United Kingdom. We said that such conclusions represented a dubious and even dangerous practice.
I think I am right in saying that a definitive text of the Fontainebleau agreement has still not been issued to this House in the form of a White Paper, though the Select Committee recommended that it should be. May we be told whether such a text has or has not been so presented? In any event, we recommended that at future economic summits a text authorised by all the parties should be published. It will be interesting to see whether such a communiqué is published following the events which took place at Milan at the end of last week. The House is entitled to know in clear terms, published as a White Paper, what has or has not been agreed in any given context. The only printed text which exists of the Fontainebleau agreement is that which was appended to the evidence of the Select Committee.
The Government have repeated the point, a crucial one, time and again, on Second Reading and tonight, that the abatement arrangements have been entrenched in the Fontainebleau agreement, and the fact that we have agreed to the limit going up to 1·4 per cent. for the Community as a whole also embodies the abatement mechanism, which, we are told, is permanent.
Surprisingly, when I reminded myself of the contents of the Fontainebleau agreement, I found in paragraph 4 of the conclusions of the presidency the words:
The correction formula foreseen in paragraph 2 (2nd indent) will be part of the decision to increase the VAT ceiling to 1·4 per cent., their durations being linked.
In other words, the abatement mechanism exists only so long as the 1·4 per cent. ceiling exists. Presumably, therefore, if it is subsequently raised to 1·6 per cent., the abatement mechanism will also be up for renegotiation. For confirmation of that one need only read the sentence in the Fontainebleau agreement—page 27 in the Select Committee's report—which says in the final two lines:
The Council will re-examine the question as a whole and will take the appropriate decisions ex novo.
I am not sure what "ex novo" means. Perhaps it should have been de novo. That is typical of the bad print that we were given. It seems clear—I would like a categorical assurance from the Minister of State on this—that the abatement mechanism is nor a permanent arrangement. Its duration depends upon the 1·4 per cent. ceiling continuing, and not being increased to 1·6 per cent. It is all very well for Ministers to say that such a change requires the consent of all member states and that the veto can be used. That is not the same as saying clearly that the abatement mechanism is permanent regardless of subsequent decisions on the percentage of VAT that is charged. We must be very clear about what will happen before we go along the route which the Government are outlining to us.
I should mention the 1·4 per cent. limit and the question of whether our contribution will be less than 1 per cent. It is worth reminding ourselves of the point of the 1 per cent. limit. When we joined the Community, it was clearly intended to be a limit. Indeed, it was clearly intended as a limit by those who drafted the original treaty. The limit was imposed on the amount of resources which it was thought the Community might reasonably have. We should note that it is effectively indexed, because the value of the VAT contribution and of customs and excise duties increases with changes in prices. Therefore, it was indexed, but it was regarded as a limit. The question to be asked about this Bill is whether there was a case for increasing the total own resources of the Community. In


that, we must have regard to the position of the United Kingdom and to the welfare of the entire Community. That will effectively mean a substantial increase in agricultural expenditure.
The so-called budgetary discipline guidelines say that the increase in agricultural expenditure will be less than the increase in the own resources base, but in absolute terms much more will be spent on agriculture. I have yet to hear a Minister explain why we should increase in absolute terms the amount of agricultural protection and subsidy in the Common Market when we have such vast surpluses in many items of agricultural production.

Mr. Marlow: I think my right hon. Friend said that the commitment is that the agriculture budget will not increase more quickly in percentage terms than Community own resources, not agricultural expenditure. It is important to differentiate between those two, because the budget may be decided upon, but expenditure can be a completely different thing.

Mr. Higgins: My hon. Friend is right to say that, and I shall mention that point in a moment. We all know that agricultural expenditure is not a pre-determined amount. That is one of the penalties that we incur for not having reformed the system of agricultural support in the Community. As was made clear the other night, it depends to some extent on the weather. The idea that this is a fixed amount, and that we know what our commitments will be, is not valid. Therefore, we are right to be concerned about the fact that the United Kingdom's contribution is only expected to be below the 1 per cent. ceiling. We cannot say, "It must not go beyond the 1 per cent. ceiling."
I hope that we can clarify some of those points. I wish to ask my hon. Friend the Minister of State about the explanatory memorandum to the Bill. The explanatory memorandum says:
Meanwhile,
—that is, until the whole procedure goes into operation on increasing the own resources limit—
the United Kingdom's VAT contribution will be abated by 1,000 million European currency units in respect of our excess contributions in 1984. By the time this provision comes into force, the United Kingdom is likely to have paid more VAT in 1985 than, under the new decision, it is liable for. On this occasion, therefore, a cash transfer of the amount of the excess will he made to the United Kingdom.
I have two simple questions for the Minister. First, what guarantee have we that the cash refund will be made? We know that some of the previous promises of refunds have not been fulfilled. Secondly, since we are paying money that we should not be paying, shall we be paid interest on the money that we are paying?
10.45 pm
With regard to the actual increase in agricultural expenditure, I am puzzled by the comments made by the Economic Secretary in winding up the debate on Second Reading. He said:
Three years ago, the increase in agricultural expenditure was 27 per cent., two years ago it was 16 per cent., last year it was 9 per cent. and next year it will be less than 3 per cent"— [Official Report, 25 June 1985; Vol. 81, c. 865.]
First, how does the Minister know, since it depends on the weather? Secondly, I have some difficulty with the arithmetic. We are being asked to raise the VAT ceiling for the Community as a whole by 1·4 per cent. We are told that our contribution goes up by a maximum of only 1 per cent. That is a substantial increase. Even though we are

told that agricultural spending is going up by less than that increase, it will be a substantial extra expenditure on agriculture. We are told that the total agricultural expenditure will go down from just over two-thirds to just under two-thirds of the total Community budget. I do not understand how that figure, the increase in own resources, of which near enough two-thirds will be on agricultural expenditure, is to be reconciled with the comparatively modest but totally unjustified increase of 9 per cent. last year and 3 per cent. next year. I hope that the Minister will be able to reconcile those two sets of figures.
We seem to have a real problem with the relationship between the figures. Maybe the answer is that we are already this year and the year before last spending more than the 1 per cent. ceiling, because we well know that under the other devices which have been used to bail out the Community we have been spending over the 1 per cent. If that is so, the increases in agricultural spending are being calculated on a base which is far too high, because they are already in excess of the 1 per cent. limit.
We have real reason to worry about the percentage that we are contributing, and also about the amount that the Community as a whole is contributing, because it is a misallocation of resources. They and we would be much better spending the money on something other than agriculture.
Much play was made on Second Reading about the fact that we make a contribution of, say, £252 million under the extra topping up arrangement, but we get much of it back. That may be so, but in terms of public expenditure it is the gross—not the net—figure which is relevant in that context. All those matters give us considerable cause for concern, and I hope that the Minister will be able to satisfy us on them, so that we shall be able to decide how to proceed.

Mr. Richard Wainwright: The right hon. Member for Worthing (Mr. Higgins) was right, as he almost always is, to stress the imperfections of the budgetary discipline arrangements and the appalling waste, which I am afraid will for a time continue, although to a reduced degree, of Community resources devoted to agriculture. He did not succeed in making me understand how the amendment would deal with those two serious flaws.
I find that, uncharacteristically, the right hon. Gentleman seems to be obsessed with the 1 per cent. and also with the possibility of genuine and complete permanence. The 1 per cent. is merely the most likely maximum that British contributions could reach under these arrangements and is likely to be exceeded only if, by some miracle, this country suddenly received almost double its present share of the social and regional fund allocations, and surely that would be welcome. We should pay more than 1 per cent. only if the major part of the present reason for giving us the abatement miraculously and splendidly disappeared. I do not understand what form of leverage on the Community the proponents of the amendment believe will be exerted' if it were accepted.

Mr. Higgins: The hon. Gentleman will be aware that we are debating more than one amendment. As we discovered earlier, it is not clear whether the abatement arrangements can be changed without our going along with them.

Mr. Wainwright: That is as may be. I shall listen carefully to those hon. Members who advance arguments on the other amendments. On the point of permanence, I cannot believe that the right hon. Gentleman, who is the soul of rationality in public affairs, believes that anything can be set in permanent concrete for decades to come. As he is well aware, that is not the nature of the world.

Mr. Budgen: That is why we are talking about a permanent deal.

Mr. Wainwright: We talk about people being permanent secretaries. We do not suppose that they are immortal. We talk about permanent building societies. They disappear like leaves in autumn. They are only permanent in contrast to terminating building societies or to secretaries who might be deposed by losing an election or something like that. Permanence is a relative term. The use of the word "permanent" is justified in this context.

Mr. Budgen: Rather in the way that Sir Harold Wilson talked about election promises.

Mr. Wainwright: I fail to see the relevance, as I am afraid I often do, of the hon. Gentleman's intervention. Wolverhamptonspeak is so completely different from Yorkshirespeak that we find it difficult to communicate.
I cannot recommend that my right hon. and hon. Friends support—

Mr. Leighton: Where are they?

Mr. Wainwright: Come now—

Mr. Roger Moate: Will the hon. Gentleman give way?

Mr. Wainwright: Not immediately. I have just been asked a question and although it came from a sedentary position I try to answer all questions addressed to me as far as the Chair will allow.
Of course, my right hon. and hon. Friends, like members of the larger parties in the House, will appear when they are summoned. There is no doubt about that.

Mr. Moate: I feared that the hon. Gentleman was going to sit down without justifying some of his earlier remarks. I do not want to misquote him, but I think he said that the common agricultural policy was wasteful and grossly inefficient. How does his party hope to cure that gross inefficiency and waste if all the leverage is removed and every time a proposal such as this comes along his party supports the putting of more money into the Community? How will he ever reform it?

Mr. Wainwright: Were it not for the proper strictness of the Chair, I should have to start my speech all over again. The amendment does not provide any additional leverage. The CAP is in desperate need of reform, it is extremely wasteful, but nothing in the speech of the right hon. Member for Worthing suggested that amendment No. 6 will provide the leverage that we all want. As I said on Second Reading, there is an urgent need for tighter budgetary discipline, but we on these Benches cannot see how the proposals from what have been described as "the old lags" by one from their ranks will alter things.
I challenge Conservative Members to persuade us that their proposals will increase the leverage. We are, as always, open to persuasion. We do not enter the Chamber with our minds already made up.

11 pm

Mr. Richard Shepherd: We have all scoured the Order Paper to see what the Liberals propose to achieve budgetary discipline, and how they would reduce the burden on British consumers in the form of food prices. The tone and substance of the speech of the hon. Member for Colne Valley (Mr. Wainwright) was that he does not care very much for the increase borne by his constituents.
Some hon. Members are trying to find out how to curb an extraordinary excess which gives rise to the greatest tax borne by the least advantaged. With the exception of the hon. Member for Colne Valley, the alliance has deserted the Chamber, although it might be summoned from the deep, as was Hotspur's spirit, to rush in to vote. In what way will the alliance restrict this extraordinary expenditure by way of food taxes? The hon. Gentleman is a member of the Treasury and Civil Service Select Committee and knows that his constituents pay more tax in food tax than in any other.
The Liberal party recommends greater expenditure. Many of us have suffered the generosity of the hon. Member for Inverness, Nairn and Lochaber (Sir. R.Johnston), who advocates yet more expenditure. We are trying to find a mechanism by which to control Community expenditure, and to divert it from this all-consuming elephant, the CAP. The Liberal party has suggested nothing. Indeed, it found a defect in amendment No. 6. Moreover, the criticism was not constructive. We expect the hon. Member for Colne Valley to identify means of constraining the burden on the least advantaged. He knows that the central issue of public debate at the moment is how to release to people their hard-earned money so that they can pursue their own interests. Some of us have identified that that can be done by cutting the cost of food.
We know that food taxes are the most regressive form in which to grind down people and that the way in which we can immediately lift up their living standard, and give them the things that the Conservative party has struggled to identify for the past six years, is to reduce that burden of taxation. What deeply disappoints some of us is that we have seen the taxes imposed upon the working people driven forward by the monstrous, covert hidden food tax. We suffered for four years a Minister of Agriculture, Fisheries and Food who drove on that engine of expenditure, reducing and grinding year after year the living standard of our people. That is what has been done. It has been covert and secret. To this day we cannot identify from the Treasury, the Ministry of Agriculture, Fisheries and Food or the Government what is the tax bill borne by ordinary families, in paying their food bills every year.
Consumption of standard commodities has reduced. People say that it is a change of taste, and that the diet that they have suffered for 50 or 60 years is no longer suitable. People do not eat butter so much. It is not possible or sanely economical to buy it. The tax on frozen beef from Australia is about £2 or £3 a pound. That is cut out. People say that our demand for frozen beef from the Commonwealth has diminished, but adduce that as if it were a remarkable contention that the provision of foods from other countries is not viable any more. Of course, it is viable.
What remedy do the Opposition, the Liberal and Social Democratic parties propose to restrain that great grinding down of the standard of living? We want to know for when those great issues are debated across the country in clue course. The misdirection of our scarce economic resources from the productive enterprises that made us a rich, prosperous country, able to sustain the social welfare and benefits that we believe in, to a common agricultural policy in a covert and secretive way, produces the greatest tax bill that is borne by the average member of our society.
It may not matter for many hon. Members who are on high incomes if their bill is £5 or £6 a week more for their family than it might be otherwise. But it is no surprise to many of us in the Conservative party that that has a debilitating and destroying effect on many of the Government's objectives. We can achieve an economic regeneration if we can direct resources away from that wasteful abuse into those areas that most require them.
The Liberal party had no response to the contention of my right hon. Friend the Member for Worthing (Mr. Higgins) on this group of amendments, when he sought what was only a mechanism for trying to rein back the way in which money is expended. We are deeply concerned that the formula that we have arrived at says that resources directed towards agriculture should not grow any faster than the resources available to the Community. That is a monstrous proposition, which has horrified many people. What it actually says is, "We shall consume yet more on agriculture and in so doing we shall tax people yet more to achieve that objective." All of us will end up consuming one carrot a day, and still pay thousands of millions of pounds to achieve that objective. That is against the interests of this country.
Each one of the parties of the House, year by year, has called out—I know it from my hon. Friends, whether in Centre Forward or any other grouping, and Opposition Members — saying, "Only £1 billion there or half a billion there." We are looking at the misdirection of the economic resources available to the Community, of sums much in excess of those, yet there is no coherent sustained attack on a position adopted by a few in Government, that all that is an acceptable price to pay for appearing to be good Europeans. Having paid the price, sometimes one may make reasonable assessments that it is worth making a payment here or a payment there because the quid pro quo is worth it. Having launched in the House last week the Bill that we are now discussing, the Prime Minister has had the most serious rebuffal on her misunderstanding and that of the Foreign Office of what is the nature of the Community. My hon. Friend the Member for Banbury (Mr. Baldry) has eloquently said that the House and the Government misunderstand the intent of the one coherent policy of the Community, which is on food prices. That goes against the historic continuity that we have sought across parties, and our ability to generate resources for our industries. By European standards we were a low wage economy, but the quid pro quo within our economy was that we were a cheap food economy. Our influence in the world was in part dependent on that, as the hon. Member for Colne Valley well knows.
We were the largest consumer of Commonwealth agricultural produce in the world. That gave us influence, which reached out from this little city of London to the corners of the world. We were the major purchaser of Commonwealth commodities from the Caribbean and the less advantaged areas, such as Pakistan. We also

supported our friendships and policies in Australia, New Zealand, Canada and the United States by being the most substantial importer of food in the world. It was in our interests to be such. We bought commodities in which those countries had a natural advantage because they could produce them cheaper than we could. It was self evident to most of our citizens that from the abolition of the Corn Laws onwards we were to have cheap food. The price and benefits that arose from them far outweighed the disadvantage of not supporting or over-supporting an agricultural interest.
During the post war years it was recognised that there had to be balance because we were all too aware of the effects of war. We had—

The Second Deputy Chairman (Sir Paul Dean): Order. I am beginning to find difficulty in relating the hon. Gentleman's remarks to the amendment.

Mr. Shepherd: I am sorry if I did not carry you with me on my exposition, Sir Paul. I was seeking to restrain the agricultural element in the Community's budget. I thought that my right hon. Friend the Member for Worthing was proposing to do that in his amendment. I was supporting that aim by giving both the reasons why and ways in which we came to that conclusion, and by pointing out the commonwealth of interest across the House in doing that. I was highlighting that aim by placing the matter in a historical context. I hope that that was a reasonable way to approach the debate, but if it was not, I defer to your judgment.
In the post-war period we came to realise through war why it was necessary to give an advance to agriculture. We are prepared to do that. No party has been or is more committed to the agricultural interest than the Conservative party. There is no question about that. We are saying that it is no longer in the interest of British farmers or of British consumers to continue to direct vast resources to the CAP. The hon. Member for Colne Valley had no mechanism to control the extraordinary expenditure on agriculture. He did not even refer to the taxes borne by his constituents. It was as if that were no longer a consequence or consideration, and the Liberal party no longer cared about the level of taxes borne by its constituents. The hon. Gentleman said nothing about the level of taxation borne by his poorest constituents through the food mechanism.
Whatever the intent behind the speech of my right hon. Friend the Member for Worthing, I understood from it that he shared my concern about the burden borne by the poorest. He recognised that we could generate resources for the regeneration of Britain and the investments that we seek to the advantage of the average man in the street. We look, therefore, to the sole representative of the Liberal party, although we know that they can all be summoned up like Hotspur's dragons from the deep, for a mechanism to ensure that that expenditure does not go out of bounds. That was not forthcoming.
I urge the House to give careful consideration to the detailed points that have been raised and to the skilful way in which my right hon. Friend the Member for Worthing adduced the arguments. Most important of all, those arguments bear consideration by the Government because they will be making the decision. They were worthy points, but they have not so far been answered in any of our discussions on the European Community over many years. I urge the Government to take them on board.

Mr. Austin Mitchell: My amendment No. 9 would prevent the 1·4 per cent. own resources ceiling from being increased to 1·6 per cent. for the next 10 years and would thus achieve the objective that the hon. Member for Aldridge-Brownhills (Mr. Shepherd) set out in an intervention which grew into a brilliant speech with which I thoroughly agreed.
My amendment seeks to prevent the constant escalation of expenditure on the common agricultural policy to which the hon. Gentleman referred. As the hon. Gentleman pointed out, it is extraordinary that the Liberal party—the party of Cobden, Bright, the cheap loaf and Lloyd George's campaign against Chamberlain's tariff reforms before the first world war—is now the biggest defender of the agricultural protection society, the CAP. The Liberal party, which is enthusiastically pro-European from a naively idealistic point of view seems as determined to ignore the warts of Europe as it is to ignore those of the SDP with which it is in alliance. In the case of Europe, that blind eye is a major fault because Europe is 75 per cent. warts in that 75 per cent. of its expenditure goes on the CAP. That is a crippling burden on every family in this country and it is extraordinary that the party of the cheap loaf and free trade should in its naive idealism be the chief defender of such a burden.
My amendment seeks to limit that crippling burden. The Government should never have agreed to the increase in the VAT ceiling from 1 per cent. to 1·4 per cent. The right to veto that increase was the one weapon that we could use to prevent the endless escalation of expenditure and to force reform of the common agricultural policy. Reform is drastically needed because paying high prices to farmers so that they produce more while the consumer buys less and the resulting food mountains have to be financed by the taxpayer is not just inefficient and economic folly. It is an obscenity in a world in which 30 people die of hunger every minute of every day. It is obscene, too, that an organisation dedicated to the improvement of Europe spends three quarters of its budget on supporting not farmers but agri-business while it spends practically nothing on Europe's main problem, unemployment. The Liberals' devoted support of such a policy casts doubt not just on their economic credibility but on their political principles. It is more important, however, to limit this expenditure than to castigate the Liberal party.
Our opportunity to force economic stringency on Europe and thus reform of the common agricultural policy lay in our right to veto any increase. That was our one strength. If we are not prepared to use that veto there is no chance of limiting expenditure on the CAP because agriculture is politically in a far stronger position on the Continent, as the German veto on grain prices has shown. Even if agricultural expenditure increases with production no faster than the Community's own resources, it will still be growing when it is already far too large. In any case, the limits that are imposed cannot be exceeded in any year by any amount if the majority feels—as it will—that exceptional circumstances apply.
We have given up a very real sanction in return for mention of promises that predictably will be worthless. We should have used that sanction and refused to increase. If in this legislation we accept the increase to 1·4 per cent., we must now use the next resting place—a refusal to agree to a further increase to 1·6 per cent.—unless the reforms that should have accompanied the first increase are forthcoming.
11.15 pm
The Prime Minister promised that there would be no increase in the own resources ceiling without binding guarantees of effective budgetary discipline. We are still to get those. Therefore, the fight must now continue to get them on the 1·6 per cent. ceiling, the Prime Minister and the Government having been conned by the lure of cash rebates that we should have received anyway. It was the duty of the EEC countries to give us that cash, and it would have been ruinous for the United Kingdom had we not got it. The Community now expects us to gibber in gratitude and to say that we accept this increase in the ceiling because of rebates that we should have got as of right. That is an inadequate justification for the increase.
The argument for my amendment is quite simple. It prevents us throwing good money after bad. It prevents us moving on to the situation described by the right hon. Member for Worthing (Mr. Higgins). Although the Government have not admitted it, the increase to 1·6 per cent. is closely linked with the permanency of our own rebate because the durations are linked by the agreement. That rebate goes on as long as the 1·4 per cent. ceiling lasts. As soon as there is an increase to 1·6 per cent., our rebate is up for grabs and will have to be renegotiated from scratch.
The 1·6 per cent. ceiling is very much in the offing, because the decision in the White Paper specifies that
the maximum rate may be increased to 1·6 per cent. on 1 January 1988 by unanimous decision of the Council and after agreement has been given in accordance with national procedures".
The Government do not have to agree with that, but why is it written in that precise form unless there is an understanding that "may be" means "will be"? We shall then be in exactly the same negotiating position as we were when there was an increase from 1 per cent. to 1·4 per cent. We shall be conned in the same way by the promise of making our rebate "permanent" if we agree to the 1·6 per cent. ceiling. We shall be lured by the same tactics. In an attempt to avoid that, my amendment requires the 1·4 per cent. ceiling to be maintained for 10 years.
The Vice-President of the Commission, Mr. Christophersen, has already pointed out that the Commission considers that the new own-resources ceiling of 1·4 per cent. will suffice for 1986 and 1987, but the question of increasing it should start to be considered now. The procedures are already under way to increase it. The United Kingdom should oppose that increase, and my amendment would prohibit it for 10 years otherwise the 1·4 per cent. increase would be invalid.
For the same reasons as the Government should have opposed the increase from 1 per cent., we must oppose the increase from l·4 per cent., and this amendment requires us to do that.

Mr. Michael Fallon: I have tabled new clause 12 for several reasons. The first is that I want to concentrate the mind of the Committee on the next increase, which is in mobilisation. Secondly, I want to explore the nature of the Government's position on the next increase. Thirdly, I want to clarify the procedure by which such an increase is likely to be considered and submitted for approval by the House.
The next increase is relevant to our debate, because it is contained in the decision of 7 May to which the Bill give effect. There is a real danger that by endorsing the statement to that effect in the preamble, the Committee


may be committing the House to the tacit endorsement of a second increase. Therefore, we need to be absolutely clear as to the nature of that second increase, and the pressure that will inevitably cause it.
It is also important to emphasise, particularly having listened to my right hon. Friend the Member for Worthing (Mr. Higgins), that the pressure to raise the second, heightened ceiling arises not only from agricultural spending, and not only in the context of enlargement. It is true that the figure of the additional 0·2 per cent. appears first in the Commission's Green Paper on financing the Community as a cost of enlargement, but quite important trends need to be considered.
As the resources are calculated in the medium to long term, it seems that the increase being posited in the budget is not entirely the same as the increase in VAT resources required to finance that budget. We already know of a diminution in the other sources of revenue—the customs duties that are being liberalised gradually under the existing GATT round, and are due to be further liberalised under the forthcoming GATT round, and the real possibility that agricultural levies will diminish over future years. As those sources diminish, and the demands of the budget increase, there will be a faster increase in the VAT revenue call up and the actual increase in the budget itself.
The Commission predicts in paragraph 3 of its Green Paper that the tariff dismantling and the fall in levies consequent on CAP reform could mean, at a timescale of 10 to 15 years, a 0· per cent. increase in the VAT call-up rate merely to maintain the real value of available own resources. That was drafted before enlargement and any further pressure on agricultural spending. The document proposed a radical leap in resources, not simply from 1·4 to 1·6 per cent., but to 2 per cent. This would:
give the Community secure financing for long enough to cover the whole transitional period of enlargement to include Spain and Portugal:'
From that, I deduce two things. First, if it is 2 per cent. rather than 1·6 per cent. that the Commission suggests would be adequate to cover the transitional period of enlargement, then the Commission will soon be back to up the ceiling from 1·6 to 2 per cent. Secondly, I deduce that that 2 per cent., framed as it is in the Green Paper, is only to finance the transitional period of enlargement. Therefore, it is not likely to be adequate to finance the other future developments that are being considered and the policies that are being proposed, let alone the ever expanding budget, increasing in the period 1978–83 by some 5 to 6 per cent. in real terms every year.
Those further pressures on spending — the second reason why the VAT ceiling will inexorably rise — are set out in the Green Paper on future financing, and have been alluded to by my right hon. Friend the Member for Worthing, although I think that he understates the case. The intensification of the Community's energy and industrial strategy, the expansion of Community expenditure on research and development and innovation projects, more systematic and extensive use of Community finance structural expenditure on the regional and social funds, the development of other structural expenditure, such as FEOGA guidance for fisheries in the Mediterranean programmes, the development of substantial Community-financed transport infrastructure 

programme, and the achievement in 10 years of the Community development aid programme that equals one thousandth of the Community's GDP are all projects requiring money.
I make no comment on the merits or otherwise of any of those proposed developments of Community activity, but I stress that there are serious upward pressures on the expenditure side of the budget quite outside the costs of enlargement and quite outside the seemingly uncheckable rise in agricultural spending.
It is also important to emphasise how this first hike in the VAT ceiling and the second hike in the VAT ceiling is not likely to be the final stage in this operation but will clearly be one of a series of increases.

Mr. Budgen: Unless my hon. Friend votes against it. I do not know why he did not vote against the Bill on Second Reading.

Mr. Fallon: If the Committee does not accept that latter point, hon. Members have only to refer to the covering letter to the second Commission Green Paper on future financing in which President Thorn of the Commission informs Mr. Cheysson, President of the Council:
I would again point out that the Commission has never proposed increaing the own resources ceiling to 1·4 per cent of the VAT basis of assessment. In the proposal made by the Commission in May 1983, this rate of 1·4 per cent. represented only the end of a first stage of operation of a new system of own resources with no ceiling.
The second reason why I tabled the new clause is that I think that it is important to clarify a little further the Government's position on a second increase in the ceiling. That position might at first sight appear obvious and clear cut. I believe that my hon. Friend will emphasise again that the Government are not committed to any increase and are not party to any such decision. We have been told that not only are the Government not committed to any increase but that there has not even been a statement of intent for which the Government have indicated their support. But the Government have signed a document containing that statement — the decision which the Bill implements — and the Committee must ask itself, if that statement is not part of the decision, why was it included in the preamble to the decision.
It seems to me that it was included because, although it was not technically part of the decision, it was at least part of the deal struck with our Community partners. Therefore, the Committee is entitled to draw out my hon. Friend a little further on the nature of that understanding and of that commitment.
My third and final reason for tabling the new clause is the need to clarify the procedure by which a second increase in the ceiling may take place. We have already been assured that such an increase will need to be approved by Parliament. On Second Reading, my right hon. and learned Friend the Foreign Secretary said that the existing arrangements
can be changed only by a unanimous decision of the member states and with agreement of all their parliaments."—[Official Report, 25 June 1985, Vol. 81, c. 800.]
That is not what the preamble says, and I do not believe that it is the constitutional position. The preamble says
after agreement has been given in accordance with national procedures.
It is my understanding that legally the House is not necessarily required to give its consent in this form to such an increase.
Whatever the constitutional position, it is wholly appropriate that the House should at least make it explicit that its own consent will be required for a second increase, and the sort of explicit understanding that I have in mind occurred during the passage of the European Assembly Elections Act 1978. Although it might have been constitutionally implicit that any further increase of the powers of the European Parliament would require approval from both Houses of Parliament, this House felt the need to state yet again in the Act itself that its own consent was required for such a change. It would be right for the House to make such an understanding explicit now because, as the hon. Member for Great Grimsby (Mr. Mitchell) has indicated, we will be dealing with these matters very soon. If ratification of a formal decision can take up to two years, and we are now dealing with a demand for an increase in mobilisation that will take effect from 1 January 1988, I expect the House to be considering a further increase in the rate of mobilisation either in the latter part of next year or in the early part of 1987.

Mr. Marlow: We are all indebted to my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) for his convincing and compelling speech. It was an important speech. We all realise that what we are talking about today in terms of expenditure — the VAT limit — is really a small part of the cost that the country has to bear as a result of the common agricultural policy. In drawing the attention of the Committee to the real food tax which is borne by the poorest members of our society, my hon. Friend did a signal service which we should remember for a long time.
I have in my name amendment No. 7; I sort of have that amendment in my name because my intention when I put it down was to include the word "not", which is not there. I shall speak to it as though the word "not" was included. The intention of the amendment is to limit the amount of our net contribution, even within the new VAT formula. Briefly, there are four reasons why I want to control the level of our net contribution.
First, and very really, I want to support the Prime Minister. At the weekend in Milan she had an unpleasant and unfortunate experience. She was confronted for the first time by full frontal federalism. My right hon. Friend the Prime Minister said that there are changes and reforms which she wants to see achieved and that there is no need for a conference to achieve them. That is right. We all want reforms such as freeing the internal market so that we have one large market without non-tariff barriers. Sadly, the reforms which we are now being offered are more of a federalist nature.
The intention of the conference, and of those who want the conference, is to bring forward more federalist policies and in this way to lure Europe, including the United Kingdom, into a more federal united states of Europe. If the message from the Committee is loud and clear that it is concerned about the level of resources that we are spending on the Community at the moment and that it will not contemplate an increase in the already over-bloated amount that we have agreed to, there will be a realisation by the federalists of Europe that their objective is less likely to be achieved.
Secondly, we are all in this country desperately concerned about the ballooning, mushrooming and ever-increasing levels of public expenditure. I see my right hon. Friend the Secretary of State for Defence climbing the steps at the back of the Chamber. He will know that in his area of activity each year the real levels of expenditure increase, even to buy the same amount of equipment and manpower. The same is true of the Health Service and of social security. Yet the fastest growing expenditure that the country is faced with is our gross contribution to the European Community. Some hon. Members have said that they do not care about the gross contribution and that what they care about is the net contribution. If we do a calculation, gross contribution less net contribution is the cost of Community policy within the United Kingdom. Over the last three years the cost of those policies has increased by 50 per cent. That is much greater than the cost of any other policy. If all our other budgets and policies had increased at that rate, this country would be severely bankrupt. It is important to control gross Community expenditure.
Thirdly, we are told the cost to Britain of the latest intergovernmental agreement is £240 million, but that it does not really matter because we shall get back £120 million in policies in the United Kingdom. All that really means is that we are getting the same policies but that they will cost us £120 million more. That is public money that is being spent. There is no benefit in that. It is just increased extravagance and increased costs.
We shall get back two thirds of the other £120 million through the rebate mechanism. We are grateful for that, but it still means that we have a net contribution of £40 million. My colleagues have said, "Only £40 million." Only £40 million for what? It is our net contribution. In the Community as a whole, that is a zero sum. We are paying in £40 million; some one else is taking it out. All these "£40 millions" add up. That £40 million means 75p per head of population. To a certain extent, money is like matter—it cannot be created or destroyed.
My 14-year-old daughter, Alice, gets 75p a week pocket money. The other day, I said, "Alice, dear, the Government have negotiated an intergovernmental agreement. It will cost you 75p and you will get nothing for it. I am awfully sorry, but this week you will have to do without your pocket money." I tried, but it did not work. That is, however, a good point.
There is a fourth reason why we should keep this level of expenditure under control — to demonstrate that we are good Europeans. The common agricultural policy does no one any good. It does the consumers and the farmers no good. It does Europe a great deal of harm. It creates conflict between ourselves and the United States. The only way in which we shall overcome the problems of expenditure on CAP is by imposing a ceiling on its expenditure. We have heard about the likely effects of the weather on the financial mechanism. We realise that this mechanism is not watertight and that it will not work. The only way in which we can overcome the problems of gross extravagance in CAP — given the continuing growth in European surpluses, and the likelihood of even greater surpluses in future years — is by imposing a ceiling on that expenditure to force Europe to redevise its agricultural policy in a way that will suit Europe, the world, our farmers and our consumers.

Mr. Teddy Taylor: I think that we all know the arguments on these important new clauses and amendments. Therefore, to avoid wasting time, I shall ask two questions. In trying to get something positive out of this matter, which concerns us all, would the Government at least be willing to say that they willnot welcome any proposal to increase further the 1· per cent. VAT limit? Will they give an assurance that they will not initiate such a proposal? If the Government answered "Yes", we would feel that this long debate had been, to some extent, worth while.

Mr. Budgen: I join my hon. Friend the Member for Southend, East (Mr. Taylor) in his practical suggestion. I should like to add another practical suggestion. The Commission says that the proposed budget will cause member states to apply a rate of 1–35 per cent. in 1986. During the Second Reading debate, the right hon. Member for Strangford (Mr. Taylor) pointed out that the proposal for 1986 was, first, subject to the uncertain demands that this demand-led expenditure was likely to make — with the usual arguments about the uncertainties of the weather, world prices, and so on — and, more importantly, based on an assumption about the value of the dollar which was highly speculative and probably extremely optimistic.
If the Commission is already proposing expenditure that demands a take-off from VAT of 1·35 per cent., I hope that my hon. Friend agrees that that does not leave a sufficient margin for error in 1986. No doubt the Treasury Bench genuinely thinks that it has done jolly well because once again it has squashed a small, unrepresentative group of troublemakers. The Government are very pleased that the Labour party is no longer in business as an Opposition and that they have demonstrated how very useful it is to have a majority of more than 140 so that they can walk all over the House of Commons. That may be so, and very useful it must be to the Government and their Whips. But, my goodness, if they come back to the House in 1986 and say, "Very sorry, we made a bit of a mistake — we rather underestimated the demands that the CAP would make on the EC budget, so do you think you could agree to a third IGA?", I think that even this House, dominated so usefully by a vast Tory majority, may feel it necessary to complain a little.
Wearing my Whip's tie, I wish to congratulate my hon. Friends on the highly effective way in which they have brought to bear the greatest voting machine that modern politics has ever seen. But even that voting machine might find it a little difficult to swallow a third IGA in 1986. Even my hon. Friend the Member for Darlington (Mr. Fallon) might vote against that. I hope that a friendly warning is given to the Commission to the effect that, if it is contemplating a budget based on 1·35 per cent., it is not leaving itself a sufficient margin of error.

Mr. Forth: I wish to bring the Committee back to a matter of detail which was glossed over during the Second Reading debate, and on which I have not yet had an answer from any Minister. It concerns something that is crucial to the entire operation that we are discussing — the budgetary discipline mechanism.
We are being offered a mechanism which is specified in a document which purports to give us a facility to control Community expenditure in a way in which it has not been controlled previously. That mechanism relies on

a fairly simple looking procedure which, on the face of it, one might expect to show results which have not prevailed in the past.
The very simple operation is that at the beginning of each year, within the budgetary procedures, a reference framework should be fixed which involves the maximum level of expenditure for the Community. Hon. Members will be reassured by the fact that a reference framework will be fixed at the beginning of each year and that the budget will be related to it. That provision is contained in article 1 of the budgetary discipline mechanism.
However, I suspect that hon. Members will be slightly less reassured by the fact that article 2 states:
Account shall be taken of exceptional circumstances, in particular in connection with enlargement.
This is neither the time nor the place to go into detail about the possible additional expenditure that enlargement will cost the community, but it must give some of my colleagues slight cause for reservation when they see mention of exceptional circumstances. Having had the encouraging sign of setting a reference framework, the mere mention of exceptional circumstances must give pause for thought.
Matters become a great deal worse when reading article 5, which contains the now notorious phrase that over the following two financial years
barring aberrant developments agricultural expenditure is brought back within the limits imposed by this guideline.
11.45 pm
For the benefit of the Committee I shall repeat a question which I have asked Ministers on several occasions and which has never been answered satisfactorily, although the Economic Secretary took it up in part on Second Reading when he generously conceded that we could not expect agricultural expenditure to be controlled when we cannot predict the weather. That may be a statement of truth, but, in the context of a so-called budgetary discipline mechanism, in which we solemnly set out at the beginning of the year a framework for expenditure, it causes me concern when my hon. Friend says, "We do not know what the weather will be like." lie has touched on a real and fundamental truth. The harvest that is forthcoming each year is the main determinate of the level of Community expenditure. Reference frameworks have no relevance or power in setting budgetary discipline. On the admission of my hon. Friend, any such mechanism is subject entirely to the vagaries of the weather and the harvest.
That would all be bad enough, but in article 6 the game is given away entirely. The great budget discipline mechanism, which is based on a reference framework arrived at at the beginning of the financial year, is subject to the following provision in article 6:
At the request of a member of the Council or the Commission, the Council acting by the majority referred to in article 1(2), may amend the reference framework.
Having started the year with a reference framework which is supposed to give us budgetary discipline, we have the facility that at any time, by a majority, we can change the reference framework and thereby blow the entire budgetary mechanism out of the water.
The Committee will be well served if during his responses my right hon. Friend answer my questions, which will reassure us, I hope, that the budgetary mechanism, on which so much rests and on which the Government have rested their entire case for giving greater


resources to the Community, is one in which we can have confidence. Given the loopholes and flaws to which I have referred, we must have answers before we can be so satisfied and give our support to any increase in the VAT ceiling.

Mr. George Robertson: This has been a brief, interesting and concentrated debate in which the Minister has been asked some embarrassing questions. I know that the Committee will be grateful that the Government appear to have lost some of the wild enthusiasm which they showed for the Bill last week and that the House of Commons may have some more time carefully to think about the issues.
The right hon. Member for Worthing (Mr. Higgins), who initiated the debate, did the Committee a considerable service by setting a sober and sensible framework for the debate. He did so by reminding us of the terms of the Fontainebleau agreement. If the Select Committee on the Treasury and Civil Service did nothing else—in fact, it has done an enormous service to the House of Commons — it provided us with our only text of the agreement. As the right hon. Gentleman has said, the agreement ties the much vaunted and much triumphed abatement to the ceiling of 1·4. Committee has properly Concentrated its attention on the speed with which the Community will reach the ceiling of 1· 4 per cent., on which are based all the promises that the Economic Secretary to the Treasury made in The Times last week on the permanence of the arrangement and the claim that the Fontainebleau agreement has changed the rules for good.
In reality, the Fontainebleau agreement has changed the rules until the 1·4 per cent. ceiling is reached, and "for good", in the language of the archaeologist who is the Economic Secretary, will not be very long at all.
I found, in my researching, an interview that the Foreign Secretary had with the head of European television services in Bonn in the Federal Republic of Germany on 18 January. The right hon. and learned Gentleman said:
I found it one of the most encouraging things in the last few months that sitting round the Community table, it is more like sitting round a cabinet table in a single national government with people genuinely searching for a common answer to difficult questions.
In the weekend that has just passed it is conceivable that the right hon. and learned Gentleman is telling us more there about the British Cabinet than he is about the Community cabinet table.
How permanent is permanent and how for good is for good? Those crucial questions must concentrate the mind of the Committee tonight and until the Bill becomes law. It all boils down to budget discipline. Are the promises that were given at Fontainebleau on budget discipline, or the promises that the Government believe were given to them, watertight, and are such promises as are built into the legislation worth anything more than the paper on which the Bill is printed?
On Second Reading I quoted Mr. Unwin, the Treasury official who made it clear in his evidence to the Treasury and Civil Service Select Committee that the budget discipline agreement was not absolutely watertight. Hon. Members know that to be the case, and, as they have said, 

the document on the 1986 draft budget has blown the gaff on what is happening in the Community. That document says:
The VAT call-up rate will be 1·35 per cent. even under the strict assumptions on which the draft budget is based. This leaves only a slight margin of about 900 million ecu up to the new ceiling of 1·4 per cent.
The Economic Secretary, when replying to the debate on the previous amendment, chose to slide over that figure. But that document makes the position even clearer when it says:
Calculated on the same basis, the VAT rate was 1·06 per cent. in 1984 and 1·22 per cent. in 1985 (the difference between that and the 1 per cent. ceiling was made up by advances from Member States).
Thus, in 1984 and 1985, the Community was considerably in excess of the ceilings that were laid down under the Treaty of Rome, and we can expect little or nothing different with the present ceiling.
We are talking about the CAP, as hon. Members have pointed out, and the whole question of budget discipline boils down to whether the CAP constraints can be made to stick. The publication Agra Europe for November of last year said:
Last week's agreement by the EEC's finance and foreign ministers on controls on agricultural support spending … was described this week by a senior EEC Commission official as 'not worth the paper it is written on.";
The hon. Member for Mid-Worcestershire (Mr. Forth) pointed out, as he has repeatedly, that the growth of Community agricultural expenditure and the loopholes inherent in the budget discipline document mean that we can have little or no faith in the ability of the Community to remain within the present constraints.
A paper produced for the journal European Trends by Mr. Edmund Neville-Rolfe, director of the Bureau Europeen de Recherches in Brussels, says:
Even if … the proposal for a freeze on average prices … is accepted by the Council, some increase is likely to have to be conceded for 1986–87. To accommodate this, as well as the cost of disposing of the carry over of stocks within the 1986 budget of 17·2 million ecu, could be a tight squeeze.
Mr. Neville-Rolfe goes on to underline the point that hon. Members have made in this debate, namely, that the loopholes that have been left under the vague phrase "exceptional circumstances" gives no confidence that the budget discipline will be adhered to. Only last weekend, the country that chose to deploy the veto on a 1·8 per cent. cut in cereal prices is now in the vanguard of a movement which wants to eliminate the veto for ever from the European Community.
The 1·4 per cent. VAT ceiling about which we are talking is already almost completely committed. It is only a matter of time, and a short time at that, before we shall be back here discussing intergovernmental agreements or the submission of a 1·6 per cent. limit. There will be more fractious negotiations over the increase to 1·6 per cent. Spending is not under control, and Ministers' assurances are as worthless now as they have been. It is right and proper for the House of Commons to set its own ceilings. If it does not, we have the prospect of returning to debate this matter again and again.

The Minister of State, Foreign and Commonwealth Office (Mr. Malcolm Rifkind): I congratulate hon. Members on their short, but forceful, contributions to the debate, which has concentrated on two matters that arise from the amendments. The first is the effect on the British contribution of the increase in own resources to 1·4 per


cent. The second is the procedure which might be applied if, at some future hypothetical date, a further increase in own resources was contemplated.
Perhaps I should begin by responding to some of the other matters raised by my right hon. Friend the Member for Worthing (Mr. Higgins) when he moved his amendment. He asked whether we could be certain that the abatement for 1985 would be paid if the Committee approved the Bill. We can be certain for two reasons: first, the sum appears in the budget which has been adopted by the EC and has gone through all its procedures; and, secondly, it is referred to in article 3(4) and on the final page of the own resources decision. The payment of the abatement flows directly from that.
My right hon. Friend asked when a definitive text of the Fontainebleau agreement would be available. A copy has been deposited in the Library, and the Treasury and Civil Service Select Committee produced an accurate copy of the agreement in its report.
Amendment No. 6 seeks to insert in the legislation the requirement that the British contribution, if the own resources element is increased to 1·4 per cent., should be kept at a maximum of 1 per cent. and should not be allowed to go above that. The Government believe that what my right hon. Friend seeks will happen. The present United Kingdom contribution is 0·82 per cent., and we believe firmly that, if and when the Community reaches the new ceiling of 1·4 per cent., the British contribution is almost certain to be no more than 0·87 per cent. That is a remarkable demonstration of what an excellent settlement the Fontainebleau agreement was for the British taxpayer. Even when the 1·4 per cent. ceiling is reached by other member states, the United Kingdom alone will not only not have to pay that much, but will still be under the present ceiling. It is churlish for any hon. Member not to recognise what an excellent deal the Prime Minister negotiated at Fontainebleau and how substantially it protects British interests.
The only way in which the British contribution could go above 1 per cent. would be if our receipts from the regional and social funds increased by more than half, from the present level of 25 per cent. to about 45 per cent., which is almost inconceivable, or that our agricultural receipts would increase by one quarter compared with our traditional share. That is also inconceivable, and no one would seriously advance the likelihood of that happening.
My right hon. Friend may ask, "Why can you not accept my amendment and put this in the legislation?" There are two reasons. First, to put a formal statutory prohibition on any British contribution above 1 per cent. would contravene the own resources decision and prevent us from ratifying the agreement. Therefore, the entire agreement would fall by the wayside. Secondly, it would reopen the Fontainebleau agreement, and one can be sure that if the United Kingdom sought to introduce new formal conditions or requirements, other member states would be similarly tempted. Therefore, while in practice the objective which my right hon. Friend seeks will, I believe, be satisfied, the proper way forward is not by legislative means.
12 midnight
My right hon. Friend also asked about the extent to which the agreement guaranteeing a two-thirds rebate of our VAT expenditure gap can be said to be a permanent agreement or a long-lasting one. If the House accepts, as

I am sure it does, that the Fontainebleau agreement states specifically that the two thirds rebate procedure for the United Kingdom will last as long as the 1·4 per cent. ceiling, and if that 1·4 per cent. ceiling can be changed only by the unanimous agreement of all the member Governments and of their national Parliaments, anyone who is concerned about the long-lasting nature of the agreement has to believe, not only that a British Government would allow the safeguard to be dropped but that the House of Commons would endorse such a decision by the British Government. I believe that either of those possibilities is literally inconceivable.

Mr. John Townend: In that case, as it is so vital to Britain that the 1·4 per cent. level is not breached, my hon. Friend would help many of us who are having some difficulty in supporting the Government tonight if he would' give an undertaking that the Government will not come back to this House, at least during the lifetime of this Parliament. to ask for an increase to 1·6 per cent.

Mr. Rifkind: I shall deal with that specific point, which was raised by my hon. Friend the Member for Southend, East (Mr. Taylor). The basic point is that even if at some hypothetical stage in the future the Government — or a future Government — wanted to consider an increase in own resources from the present level of 1·4 per cent., it is inconceivable that they would be prepared to contemplate that if at least the present level of protection negotiated at Fontainebleau, or something better, was not to be available. Clearly, that would be an absolute control which any Government would have in a matter of this kind.

Mr. Marlow: Before the intervention my hon. Friend used words to the effect, "If it were necessary for all Governments to agree" and "If it were necessary for all Parliaments to agree". Can he tell the House that it is necessary for all Governments and all Parliaments to agree?

Mr. Rifkind: I shall be dealing with that point. but I will deal first with the point raised by my hon. Friend the Member for Darlington (Mr. Fallon), who wanted reassurance as to the certainty of Parliament having the opportunity to take a decision on any question of the level of own resources. One can give that guarantee without any qualification. Just as for this increase in own resources it has been considered essential for this Parliament to consider whether to give its approval, so too would that be an absolute requirement in regard to any future question, at whatever stage that might be. That is not purely a British requirement. It is an equally fundamental requirement of every Government and every national Parliament.
My hon. Friend the Member for Northampton, North (Mr. Marlow) accepted that his amendment was defective in regard to one not unimportant word. I think he will appreciate that his amendment would be inappropriate for two other specific reasons. First, it would seek to impose a limit which is substantially below our present contribution to the European Community. Secondly, and more important, if such a condition were imposed, not only would the increase in own resources fall away but the British rebate arrangement would also fall away. It is so


linked to the own resources decision that his amendment would remove the protection which the British taxpayer now has.
I deal now with the substance of the amendments of my hon. Friend the Member for Southend, East (Mr. Taylor) and the hon. Member for Great Grimsby (Mr. Mitchell), and to the question whether there could be a time when the House could be asked to consider a further increase in own resources. The reference in the own resources decision to 1·6 cannot on any basis be taken as being either a legal commitment or a political commitment by Her Majesty's Government to consider as acceptable or desirable at any stage an increase in own resources from 1·4 to 1·6. It is not just in the preamble to the own resources decision; it is phrased in a way that makes it abundantly clear that it is little more than a statement of the obvious.

Mr. Austin Mitchell: Why is it there?

Mr. Rifkind: For the simple reason that a number of member states wanted an increase to 1·6 per cent. That was unacceptable to other members states and a compromise was reached which provided a form of words which was acceptable to those who wanted 1·6 per cent., although they well knew that it involved no legal or political commitment by the majority of the member states.

Mr. Budgen: My hon. Friend used the word "compromise". Compromise means that each party goes some way towards the other. To what extent did the British Government go towards the other parties?

Mr. Rifkind: To the extent of agreeing a form of words which stated the obvious. It may not have been a good deal for the other side. I shall quote the words of the document to ensure that there is no misunderstanding:
Whereas the maximum rate may be increased to 1·6 per cent. on 1 January 1988 by unanimous decision of the Council and after agreement has been given in accordance with national procedures.
My hon. Friend is a distinguished lawyer. He will be aware that if he were advising his client about the extent to which that would ensure that own resources were increased to 1·6 per cent. he would say that it was a pretty raw deal. I am sure that my hon. Friend would be the first to advise his client not to rely upon such a document.

Mr. Budgen: They were conned.

Mr. Rifkind: My hon. Friend can make whatever interpretation he likes. I do not need to add to that. There is no such commitment, and that is important. Secondly, I repeat that any future increase would have to be subject to the approval of this as well as other national Parliaments.
My hon. Friend the Member for Southend, East, in a short but nevertheless important contribution, asked whether the Government would welcome any proposal for a further increase and whether they would consider initiating such an increase during the course of this Parliament. Naturally, we should have to consider on its merits any request for an increase in own resources, but Her Majesty's Government would not welcome any proposal for a further increase in own resources during this Parliament. I cannot see us initiating any such request.

Mr. Forth: Will my hon. Friend answer my question before he sits down?

Mr. Rifkind: My hon. Friend will appreciate that we are in Committee and that I have been dealing with specific amendments. He will be aware that the comments which he and others made about the effects of climate on agricultural expenditure do not apply merely to the European Community or to the system of agricultural support in the Community, but apply equally to a system of deficiency payments or any system which must take into account world prices when public expenditure is being considered. Any fair assessment of these matters would take that into account.
On the basis of my comments about the Government's attitude to any further increase in own resources, I hope that my right hon. and hon. Friends will not feel obliged to persist with the amendments.

Mr. Higgins: In the light of my hon. Friend's reply, and in particular the remarks that he made towards the end of his speech, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

New Clause 13

REPORT ON COMMISSION CALCULATIONS

'Within one calendar month of receipt of the calculations made by the Commission under section 5 of Article 3 of the Decision, a paper will be presented by Her Majesty's Government to both Houses of Parliament explaining the financial consequences of these calculations for the Consolidated Fund. '—[Mr. Teddy Taylor.]

Brought up, and read the First time.

Mr. Teddy Taylor: I beg to move, That the clause be read a Second time.

The Second Deputy Chairman: With this it will be convenient also to consider the following new clauses:
No. 17 — Report on Operation of the Decision—
'A Report shall be placed before each House of Parliament annually on the financial liability placed on the Consolidated Fund of the implementation of the Decision.'.
No. 19—Report on additional revenues—
'A Report shall be submitted to both Houses of Parliament by Her Majesty's Government in the event of any additional revenues being agreed in terms of Article 2 of the Decision.'.

Mr. Taylor: The new clause proposes annual reports. We have found to our distress previously that the High reports have not always been shown in what has happened. With regard to the Government's estimates on contributions and so on, it would be helpful to have a regular system of reporting back. I wonder whether my hon. Friend sees any scope for agreeing something along those lines.

Dr. McDonald: I shall be as brief as the hon. Member for Southend, East (Mr. Taylor). I have no doubt that the Economic Secretary will reply that the information is readily available, but such information should be clearly available so that we understand exactly what the abatement mechanism involves and the amounts of money that we pay in terms of the various articles and decisions to which the new clauses refer. Information should be less misleadingly available than is evidenced in the parliamentary replies which the Economic Secretary has given to the hon. Member for Southend, East.

Mr. Ian Stewart: The Government will endeavour to provide the necessary information in as clear a form as possible. Calculations relating to abatement will be included in the preliminary draft budget, the draft budget and the budget as adopted, all of which will be laid before the House with explanatory memorandums. I shall ensure, as I always try to do, that that information is made available as soon as possible after those documents are in our hands. There is further information in the public expenditure White Paper and in the Autumn Statement.
Those documents should provide the information that hon. Members need. It is especially difficult to deal with parliamentary questions about refunds and abatements at the moment, because we are at the point of transition from the old system to the new, so the manner of presentation is not always straightforward. I think, however, that I can respond favourably to the spirit of the remarks that have been made.

Mr. Teddy Taylor: In view of that answer, which I greatly appreciate, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

To report progress and ask leave to sit again.—[Mr. Peter Lloyd.]

Committee report progress; to sit again tomorrow.

Further Education Bill [Lords]

Order for Second Reading read.

The Parliamentary Under-Secretary of State for Education and Science (Mr. Peter Brooke): I beg to move, That the Bill be now read a Second time.
It gives me particular pleasure to bring to the Commons a Bill on which Government and Opposition in the House of Lords have worked with remarkable unanimity of purpose to achieve what was described as a -high degree of consensus" as the Bill left the upper House.
The House will be well aware of the Government's concern to ensure that the education service makes the maximum possible contribution to the vital business of wealth creation for the country. In relation to higher education, the recent Green Paper on the development of higher education to the 1990s made this theme its leitmotif. It was a theme that, in relation to further education, ran through the Government's White Paper on training for jobs.
To this end, the central contribution of the education service is through the provision of appropriate courses of education and training and, at the higher education level, in undertaking associated research of high qualify. But the education system also has the capacity — and I would go as far as to say the responsibility — to apply its intellectual expertise and specialist facilities more directly to the business of wealth creation, particularly by working in collaboration with industry and business enterprises.
It is already open to universities, as autonomous institutions, to do that. It is the principal purpose of this Bill to remove the legal barriers which at present prevent their counterparts in the local authority sector from doing the same, and to enable them to engage in commercial activities which arise out of their primary educational and research functions. The restrictions arise because most polytechnics and colleges of further education have no separate legal existence from the local education authority that maintains them. Local authorities are restricted by statute in the commercial activities that they can undertake; their polytechnics and colleges are currently automatically caught by the same restrictions.
The Bill also repeals section 28(b) of the Sex Discrimination Act 1975. At present, colleges are legally permitted to run single-sex PE courses for prospective teachers. In 1975, when the Sex Discrimination Act was passed, there were several such courses, but over the years they have been supplanted by mixed courses, and there are now no segregated courses in England and Wales and only two in Scotland, both of which it is planned to integrate in the near future. Meanwhile, the Commission for the European Communities has issued a reasoned opinion to the effect that the exemption made in section 28(b) of the 1975 Act contravenes the EC equal treatment directive 1976. The Government have not accepted that opinion, but have decided that there would be little point in defending before the European Court of Justice a provision the original purposes of which have almost entirely disappeared in practice. The Government are therefore taking this opportunity to repeal section 28(b) but without making any other changes to the Sex Discrimination Act.
I return now to the main business of the Bill. It has been widely held for some time that ready use should be made of the facilities and expertise in higher education


institutions. That was underlined in 1983 by a report of a joint working group of the Advisory Council for Applied Research and Development and the Advisory Board for the Research Councils chaired by Sir Alan Muir Wood on "Improving Links between Higher Education and Industry". Among other things, the report recommended that the law be changed to allow polytechnics to negotiate contracts and undertake consultancies. The Bill fulfils that recommendation.
As universities have shown, there are a great many opportunities that can be profitably pursued by education establishments in co-operation with business. They range from sponsored or joint research projects through the exploitation of inventions to consultancy and the scientific testing of equipment and materials. Clause 1 defines the scope of those activities by reference to the normal educational activities of teaching and research. Clause 2 empowers local education authorities to enter into agreement for the supply of those byproducts of educational activities, using further education establishments' facilities and the skills, expertise and ideas of their staff and students. It may well be — indeed it is the Government's expectation — that LEAs and their institutions will feel that setting up limited companies will in many circumstances afford the best channel for their commercial activities. Accordingly clause 2 empowers LEAs to lend money for that purpose to companies in which they hold a significant stake — 20 per cent. or more of the voting shares. It is not necessary for the Bill specifically to empower local authorities to establish or hold shares in companies, since they already have that power under section 111 of the Local Government Act 1972.
Engaging in commercial activities, however, necessarily entails being subject to commercial disciplines, and having to make the same hard choices as face business enterprises. The Government have been particularly anxious therefore that local authorities and their institutions should, in engaging in commercial activities, be subject to an appropriate financial regime that does not enable them to engage in unfair competition with private sector enterprises. Getting the balance exactly right, I acknowledge, is not easy; and the Government have been happy, in the light of persuasive arguments advanced in another place, to introduce a number of amendments relating to that aspect of the Bill.
As now amended, therefore, the Bill requires local authorities to price all contracts at the open market value, and to use their best endeavours to ensure that the separate revenue account that they will be obliged to keep in relation to their commercial activities shows an annual surplus. Such accounts will also have to show the full cost of the commercial activities, including attributable overheads. The intention here is to put polytechnics and colleges as nearly as possible on to the same footing as any other business enterprise. The only exceptions to that rule are supplies arising as an integral part of teaching, where the predominant purpose is to train the student, and the product arises only incidentally to that; and supplies to research councils or other specified public bodies.
Clause 3 lays down the financial and accounting framework, within which the commercial activities must take place. It provides for the Secretary of State, after consultation with local authority representative bodies, to

set minimum interest rates for the loans which authorities may make to companies. The purpose of the Bill's accounting arrangements is to provide a consistent approach between one authority and another and, as I have explained, to ensure fair and open competition. I assure the House that in practice those obligations will be kept to the minimum consistent with their purpose. The Department is already engaged in consultations with the local authority associations and the Chartered Institute of Public Finance and Accountancy about what form the accounting arrangements should take. The accounts of limited companies set up by authorities and their institutions will obviously be subject to company law, rather than to the provisions of the Bill.
If hon. Members have any more detailed points which they wish to raise on the Bill's provisions, I shall be happy to answer them during its passage. In conclusion, I should like to remind the House of the Bill's underlying objective. It is to release the innovative talent, which we believe exists abundantly in polytechnics and colleges throughout the land, so as to bring rewards — financial and otherwise — to LEAs and their institutions, to the innovators themselves, to their partners in industry and to the nation as a whole. The Bill merely provides the framework. It is up to LEAs, their institutions and lecturers to make it happen.
The Bill deserves the support of hon. Members on both sides of the House, and I ask for that support.

Mr. Andrew F. Bennett: The Minister has offered us some fine words about his hopes. I hope that he will admit that in many colleges and polytechnics those hopes have already been achieved. Whether or not that was legal, those colleges already have a successful record in doing what the Government seek.
The Minister also said that he was glad that there was so much accord in the other place when the Bill was finally debated there. I suspect that that was because it was slipped through in the dinner interval. I also suspect that the Government hoped to slip the Bill through at our breakfast interval, but fortunately we are debating it a little earlier than that. Nevertheless, the Government seem to want to slip it through without much national debate, claiming that it deals with practical problems. We suspect that they are again moving towards privatisation, and want to hive off some of the public higher education sector. The Bill should be more fully debated than it will be this evening.
All hon. Members are aware of how difficult it is to draw the line between corruption and misuse of public resources, and good common sense. Many of us have come across lecturers who have become consultants for private companies within their college area, and who have eventually been offered a place on the board, shares, free trips abroad or some other benefit, while the college gets no fee or benefit. It is only right that the college and sponsoring authority should benefit if lecturers carry out work within the college's time.
It is difficult to work out how much a lecturer uses college facilities and time and how much he uses his own to advise and help local businesses. It is difficult to draw clear guidelines.
Moreover, almost all colleges with catering establishments offer training restaurants, and those with hairdressing courses often offer hairdressing facilities.
That raises the question of what the charge to the general public should be, how far it should be related to competing establishments outside where there is no training, and how far it should be reduced because the students are in training. In car maintenance courses, the car of the principal or senior lecturer is normally repaired, which also raises questions. Those are difficult areas, but most colleges have managed to tiptoe through them correctly. Nevertheless, there must be some control and consideration of those areas.
I hope that the Government will not push too many services into becoming purely commercial operations, especially training restauraunts and hairdressing services which benefit pensioners who are prepared to come at inconvenient times.
The Government should also be careful about insisting that fees be charged for other services to the community, especially to groups who are not in a position to pay for them. We should accept the basic principle that our education institutions are a resource for the whole community, not just for a small minority. Tenants' associations, environmental groups and the like often seek advice and expertise from such institutions. It would be unfortunate if they were denied that opportunity in the future because they could not pay for those services.
With regard to clause 4 and the sex discrimination provisions, it seems logical to carry out the directive and to remove the waiver from the legislation. I understand that in practice the exception applies to just two colleges in Scotland — Dunfermline and Jordanhill — and to a minor extent in Northern Ireland. I understand that we are still awaiting the outcome of an inquiry into the provision of physical education courses. How far does this legislation prejudge the outcome of that inquiry? Will the two courses in question simply remain but both become mixed courses or do the Government intend to push through a merger of the two Scottish institutions?
I should also like an assurance from the Government that this is not a major new departure for education institutions but an attempt to make it clear beyond any doubt that what the better polytechnics and colleges of further education are already doing is perfectly legal and that institutions which raise additional resources in this way will not have to hand them over to the local authorities and that the charges imposed will take account of the groups who use the services. In relation to the fair return provision in clause 2, I hope that account will be taken of the fact that for services such as training restauraunts and hairdressing members of the public have acted as willing guinea pigs for a very long time and that the charges will not be set too high.
Finally, perhaps the Government will consider deferring the Committee stage to allow for a little more probing and a wider debate outside the House before the Bill completes its passage.

Mr. John Maxton: I wish to deal only with clause 4, which relates to the Sex Discrimination Act 1975. My comments will relate particularly to Dunfermline college of education and to the Scottish school of physical education at Jordanhill college of education.
I should make it clear at the outset that I speak for the Association of Lecturers in Colleges of Education in

Scotland but in an entirely honorary, unpaid capacity. As a former chairman of the association I am expected to raise matters of this kind.
It is astonishing that in almost a throwaway remark in the dead watches of the night a Minister with no responsibility whatever for Scottish education should announce a major policy change in relation to Scottish colleges of education. I am glad to see that the Under-Secretary of State for Scotland with responsibility for education in Scotland has now arrived but he was not present when the change of policy was announced.
The Minister said, "Since 1975 things have changed. In England and Wales there are no longer any colleges that are not open to both sexes." He then said that only two Scottish colleges were affected and that these would merge in the near future. That is news to the Scottish college of education system, which did not know that those two colleges would merge in this way. No announcement has been made by the Scottish Office, and the only information that has been given relates to the implications of this clause, reference to which was made in correspondence with the principal of Jordanhill. That states:
Clause 4 of the Bill seeks to repeal Section 28(b) of the Sex Discrimination Act".
That has already been said. It adds:
I should also explain that it is not the Secretary of State's intention to bring Clause 4 into effect until such time as the Department has considered the STEAC Report on the framework of higher education in Scotland as a whole".
That committee has been looking at the nature of higher education in Scotland for some time, and I gather that it will report in the autumn. Quite rightly, the Secretary of State is saying that he wishes to wait until he knows the outcome of that inquiry—[Interruption.]
From a sedentary position the Minister responsible for Education in Scotland agrees with me. But that is not what the Parliamentary Under-Secretary said in his opening remarks. He said that these colleges were to merge in the near future. I hope that we shall get some clarity on this point, because there seems to be a major shift in intention.
I cannot disagree with the thrust of the legislation. It is right that these colleges should take in students of both sexes. Given present numbers in Scottish colleges that train teachers of physical education, it would not be night to take on students of both sexes and divide them up. In some ways it make sense to take the Scottish college of physical education of Jordanhill and merge it with the Dunfermline college. That makes more sense than closing down completely the facilities at Dunfermline college and moving them to the much larger complex at Jordanhifl. I hope that that is how the Minister's thoughts are moving.
That should have been done through a Scottish Office statement or by legislation relating directly to Scotland, rather than have it thrown into a basically non-controversial Bill that in the main relates to England and Wales. There is a separate method in this House for dealing with Scottish matters, and it is not right that we should have a major change in the way in which Scottish colleges of education operate by means of a throw-away remark at a late hour by a Minister who is not responsible for Scottish education.

Mr. Robert Rhodes-James: I intervene very briefly to welcome the Bill and the principles that it enunciates, because they are long overdue.
Would it not be possible, however, to draft legislation in more comprehensible terms? In particular, I draw my hon. Friends attention to clause 2(7), which states:
For the purposes of this Act the open market value of goods or services shall be taken to be the amount of the consideration in money that would be payable for the supply by a person standing in no such relationship with any person as would affect that consideration.
I mention that particularly because legislation that is as important as this should be expressed in terms that can be understood, are comprehensible and stand up to inspection.
The legislation is right in principle. However, legislation such as this affecting colleges of further education, which will have to be communicated to people, should surely be communicated in the Queen's English.

Mr. Brooke: With the leave of the House, I should be delighted to respond to points that have been made in the course of the debate. The hon. Member for Denton and Reddish (Mr. Bennett), in acknowledging that there is broad agreement on the Bill, raised the question of whether such a Bill was necessary, given what has already been done by many polytechnics and colleges. It is worth saying that authorities whose colleges engage in commercial trading do so at present in reliance on section 111 of the Local Government Act 1972, which permits an authority to do
anything which is calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions".
The difficulty with such widely worded expressions is the risk, particularly when under scrutiny in adversity, that the courts may decide upon a rather narrower interpretation than the authority. I agree with the hon. Gentleman that admirable things are already being done by polytechnics, and the purpose of the Bill is to remove any dubiety at all and to confirm that these actions are undeniably legal.
The hon. Gentleman went on to speak about the arrangements under which those employed by polytechnics and colleges at the moment conduct services in the market place. These matters are essentially for the colleges and authorities concerned, although I recognise the significance of what the hon. Gentleman said, and I am certain that those outside will have noted it.
The hon. Gentleman referred to supplies and the pricing of them — hairdressing charges and training restaurants are good examples. These issues are specifically referred to in the Bill in clause 2(4) as
goods or services · supplied, in the normal course of any of the educational activities
and they are excluded from some of the pricing considerations that would otherwise apply. We have good reason to believe that the restaurants and hairdressers that are anxious to employ people coming out of the courses recognise that this is appropriate by-product of the courses.
A certain amount was made about sex disrimination in Scotland, not only by the hon. Member for Denton and

Reddish but by the hon. Member for Glasgow, Cathcart (Mr. Maxton), and I was delighted that he joined in the debate. What I said earlier is that
there are now no segregated courses in England and Wales and only two in Scotland, both of which it is planned to integrate in the near future.
In Scotland, there are two courses, one at Jordanhill for men and one at Dunfermline for women. A report is expected before the end of the year from the Scottish Tertiary Education Advisory council on the framework for higher education as a whole in Scotland. Until that report is available, no decision about the colleges will be made.
I should stress that I was referring to plans to integrate the two courses concerned, and not to merge the colleges, which is a much wider issue. It is intended that moves will be made towards integrating the sexes in PE teacher training in Scotland, as soon as possible after the publication of the report. Because of this potential delaying factor, the Further Education Bill provides for the repeal to be brought into effect at different times in England and Wales and in Scotland. I hope that that reassures the hon. Member.
The hon. Member for Denton and Reddish drew attention to the fact that we were taking the Bill through all its stages tonight. We had understood that it was agreed that that should be done. In any event, it is in the interests of the House and of the further education community to proceed as has been announced, and I hope that the hon. Gentleman will feel able to accept that.
I think that that exhausts the subjects raised in the Second Reading debate, except for the comment of my hon. Friend the Member for Cambridge (Mr. Rhodes James), who drew attention to certain infelicities in the Bill's language. I acknowledge that in seeking to provide phraseology which will remove doubt about the pricing matters with which the Bill is concerned, we may have ended up with wording which is perhaps not the most beautiful that the House has ever had before it.

Mr. Andrew F. Bennett: I should have thought that, in a spirit of co-operation, the Minister would have offered to his hon. Friend the opportunity to table a manuscript amendment so that he could alter the offending language.

Mr. Brooke: My hon. Friend the Member for Cambridge and I are on very warm terms. I do not think that he wanted to press his point quite that far, so it is a dilemma that I think I shall be spared. But I am grateful to my hon. Friend for drawing attention to the matter.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Neubert.]

Further proceedings stood postponed pursuant to the Order of the House this day.

FURTHER EDUCATION BILL [LORDS] [MONEY]

Queen's Recommendation having been signified —

Resolved,
That, for the purposes of any Act resulting from the Further Education Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the said Act in the sums payable under any other Act out of money so provided—[Mr. Neubert.]

Further Education Bill [Lords]

Considered in Committee (pursuant to the Order of the House this day)

[MR. HAROLD WALKER in the Chair]

Clause 1 ordered to stand part of the Bill.

Clause 2

POWERS OF LOCAL EDUCATION AUTHORITIES

The Parliamentary Under-Secretary of State for Education and Science (Mr. Peter Brooke): I beg to move amendment No. 1, in page 2, line 21, leave out
`under the Education Act 1944'.

The Chairman: With this it will be convenient to discuss Government amendment No. 2.

Mr. Brooke: These two amendments are tabled in response to one tabled by Lady David in another place which she withdrew on the understanding that the Government would table their own amendment along similar lines.
The effect of amendment No. 2 is to cause the Bill to be cited and construed as one with the other Education Acts, thus emphasising that the Bill forms part of that body of education law. Amendment No. 1 is purely consequential.
As a result of the main amendment, the Secretary of State for Education and Science will be able to exercise a number of the general powers conferred on him by the Education Act 1944 in relation to activities under the Bill, including in particular sections 67, 68 and 99.
Sections 67 empowers the Secretary of State to determine disputes between local education authorities and governors. Sections 68 and 99 and default powers permitting the Secretary of State in the last resort to issue directions where he considers that an authority or body of governors is acting unreasonably or in breach of its powers and duties under the Education Acts. The power to vary or revoke orders or directions conferred by section 111 of the 1944 Act will also apply to orders and directions made under the Bill.
It is the Government's hope that only in very rare cases will it be necessary to exercise these powers. They are powers which the Secretary of State already has but very rarely uses in their educational context, and it is not our intention that the Secretary of State should intervene in the commercial matters covered by the Bill, except as a last resort.

Amendment agreed to.

Question proposed, That the clause, as amended, stand part of the Bill.

Mr. Robert Rhodes James: When my hon. Friend has considered the matter, he might write to me to explain exactly what clause 2(7) means.

Mr. Brooke: I am delighted to give the assurance that I will do so.

Question put and agreed to.

Clause 2, as amended, ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.

Clause 4

REPEAL OF S. 28(b) OF SEX DISCRIMINATION ACT 1975

Question proposed, That the clause stand part of the Bill.

Mr. John Maxton: On Second Reading it was right that the Minister of State at the Department of Education and Science should respond to the remarks I made. Although he did so with ability and charm, it is a Scottish Office matter. The Minister who is in charge of education in Scotland is on the Bench. He might like to have the opportunity to say a few words in his own defence; he is desperately shaking his head.
I accept what the Minister said and I look forward to the Muir Wood report with interest. I emphasise again how much better it would be if we in Scotland had an assembly in which we could deal with matters such as this at the proper time of day, with due deliberation and with an opportunity to consult all interested parties in Scotland.

Mr. Brooke: I have already been given a lesson by the hon. Member for Glasgow, Cathcart (Mr. Maxton) on the hazards of straying into Scottish affairs. The last thing I will do is follow him into the issue of an assembly, tempting though the suggestion is.

Question put and agreed to.

Clause 4 ordered to stand part of the Bill.

Clauses 5 to 7 ordered to stand part of the Bill.

Clause 8

SHORT TITLE

Amendment made: No. 2, in page 6, line 11, at end insert—
'(1A) The Education Acts 1944 to 1981, the Education (Fees and Awards) Act 1983, the Education (Grants and Awards) Act 1984 and this Act, except sections 4 and 5 above, may be cited together as the Education Acts 1944 to 1985.
(1B) This Act, except sections 4 and 5 above, shall be construed as one with the Education Act 1944.'.— [Mr. Brooke.]

Mr. Brooke: I beg to move amendment No. 3, in page 6, line 12, leave out subsection (2).
The amendment removes the privilege amendment inserted by the Lords to avoid infringing the Commons privilege. Although we do not expect any increase in public expenditure as a result of the Bill's passage, it is nevertheless necessary to remove the subsection in accordance with usual custom.

Amendment agreed to.

Clause 8, as amended, ordered to stand part of the Bill.

Bill reported, with amendments.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.

Bill read the Third time, and passed, with amendments.

Overseas Development and Co-operation

The Minister for Overseas Development (Mr. Timothy Raison): I beg to move,
That the draft African Development Fund (Fourth Replenishment) Order 1985, which was laid before this House on 20th June, be approved.
The purpose of the order is to authorise an increase in our payments to the soft lending resources of the African development fund.
The African development fund is an important part of the international economic system. It was set up in 1973 to contribute to the economic and social development of the regional member countries of the African Development Bank by providing finance on concessional terms. It is a long-term development lending institution. The fund has broadly the same developmental objectives as our own aid programme — to help the poorest countries. We have always supported the fund, and the United Kingdom was one of its founder members. Fourteen independent African members of the Commonwealth have received ADF loans. As part of a multilaterally negotiated arrangement, our own contributions to the fund help to gear up a greater flow of money to the poorer countries, and to the poorest people within those countries.
The African development fund is a joint partnership between the African Development Bank, which holds 50 per cent. of the voting power, and 26 non-regional participating states. Almost 75 per cent. of the fund's loan commitments in 1984 were to the very poorest member countries. This figure is likely to increase this year, as more than 90 per cent. of projects in the fund's pipeline are for countries with a per capita GNP of less than $510. All ADF loans are interest-free, but they attract a small service charge of 0·75 per cent. They are repayable over 50 years, with a 10-year grace period—except for lines of credit, for which the repayment period is up to 20 years including a grace period of up to five years.
The present famine in Africa has emphasised the importance of self-sufficiency in food production. Africa's food dependency on outside sources has grown at an alarming pace, with imports of grain increasing at 11 per cent. a year during the past 20 years. The importance of strengthening agriculture, particularly food production, cannot be doubted. Agriculture has received the largest share of fund resources—just over 40 per cent. in the period from 1974 and almost 42 per cent. in 1984 alone. Transport received the second largest share with 26 per cent., followed by public utilities with 18 per cent. and education and health with 15 per cent. By the end of 1984, the fund had approved 349 loans amounting to some £1,870 million equivalent at current exchange rates. Of this sum, £558 million had been spent. There was a slowdown in disbursements in 1984, however, reflecting the current difficulties for African countries in implementing projects.
The fund is aware of those problems and is trying to help by providing increased technical assistance to improve the preparation and implementation of projects. Five per cent. of the replenishment will again be available for technical assistance. So far, the United Kingdom has committed to the fund £55·2 million, of which about £21·4

million has been disbursed. Negotiations for the fourth replenishment of the fund's resources, to cover the commitment period 1985 to 1987, were successfully completed in 1984. The participating states and the African Development Bank agreed to provide jointly £1,012 million—an increase of almost 50 per cent. over the previous replenishment and within 0·2 per cent. of the target set in the governor's resolution. Our own share of the replenishment, subject to parliamentary approval, will be £30,934,961 at the agreed exchange rate. That is a share of 3·05 per cent. of the target figure. The proposed replenishment and its terms and conditions were approved by the board of Governors of the African Development Bank and fund on 2 November last year.
The replenishment arrangements include provisions which envisage that other countries' contributions may be released more slowly for commitment if one or more of the donors fails to meet its obligations in full or in time. That is a valuable safeguard. I hope that the House feels that the order is of value to the poorer countries of Africa. I therefore commend it to the House.

Mr. Stuart Holland: I welcome a replenishment of this very important and significant fund. Of course, we are well aware of its concessionary nature and the positive contribution that it can play in relation to developments in the African continent.
However, the Government's contribution is less than it should be, and certainly so against the scale of the debt crisis with which Africa is faced. At the moment Africa is very much under-capitalised. The contributions made by the fund are good in principle, but they are slow in disbursement. The scale of the under-capitalisation has already been covered by several contributions on development issues in debates in this House during the past two to three weeks, but it is worth stressing that the net flows of capital to Africa, both private and official, have fallen considerably from $11 billion in 1980–82 to a projected $5 billion for 1985 to 1987. That decrease has been substantially due to the fall in private capital flows something which those supporting market forces in Africa — not unassociated with the current Administration in the United States — should note. It is especially important that we offset that by public capital flows.
The scale of the overall debt for Africa of $80 billion, with an average interest rate of 8·6 per cent., is resulting in a debt service of $11 billion as opposed to $4 billion in 1981. Such figures and proportions put the Government's contribution into proportion.
It is also important to look at the structure of resource distribution in the fund against disbursement by the bank, over the 1980s. For example, at the end of 1981 agriculture constituted 26 per cent., transport 25 per cent., public utilities 25 per cent., industry 16 per cent. and education and health 8 per cent. For 1983 the agriculture contribution went down to 23 per cent., and the public utilities share was substantially up from one quarter to one third. Industry was down by nearly a half in percentage terms. Frankly, one would expect that more funds could be allocated to agriculture, granted the massive and horrendous scale of the drought in the sub-Saharan countries. We are sure that the directors of the fund are doing their best to shift resources into agriculture, but they need more support to do so.
It is interesting to look at the average size of project loan being made. In 1982 it was 11 million units of account, and in 1983 16 million units of account. In other words, on 1983 figures, the African Development Bank accounted for some 40 per cent. of the total cost of projects and there has been a very considerable rise in the percentage of projects covered by the fund.
In one sense, that is to be welcomed, but inasmuch as there tends to be a preference by the fund for financing larger projects—whether dams, roads or public utilities — that share has risen, and we trust that it will not concern itself exclusively with the larger rather than the smaller projects.
Despite what the Minister said—and I noted it with interest — about contributions going to the poorest countries, that is not borne out by the relatively recent figures for the bank. For example, the cumulative loans in 1983 show that Morocco gained 109 million units of account and Ethiopia only 16·5 million. Tunisia gained 163 million and the Sudan only 22 million.

Mr. Raison: The hon. Gentleman is talking about the bank rather than the fund, if I understand him correctly. The fund is, in effect, the equivalent of International Development Association. The fund does for the bank what IDA does for the International Bank for Reconstruction and Development. Surely it is a little misleading to talk in terms of bank lending, unless I have misunderstood the hon. Gentleman.

Mr. Holland: No, I think not, much as we would talk in terms of what is the relation of IDA lending to World Bank lending, and not least in view of the overall debt crisis affecting the drought-ridden countries in sub-Saharan Africa. It is precisely this overall context of the role of the fund that I want to stress in giving these figures. I will put them again. Ethiopia is coming low and Sudan is coming low in terms of the African Development Bank's funding so that the concessionary finance is needed more than ever and has to be taken as only offsetting that other weighting in the country distribution of the bank's financing.
As with Lomé and as with many other agencies, as we are well aware, the disbursement has been slow. The figures to the end of 1983 show that nearly 40 per cent. of allocated loans are not yet disbursed. It is clear that in the replenishment of the fund, from the figures which are available, the United Kingdom's contribution is less than half that of France and Italy, less than a third that of Germany and Canada and less than a quarter that of Japan. It is only a fraction above that of Denmark, a much smaller country than the United Kingdom and one that is facing public expenditure constraints. This low contribution from the Government is against the background of the lamentable cuts in overall official development assistance.
The agricultural crisis in sub-Saharan Africa clearly will not be remedied by measures such as lending by the fund alone. We support the fund; we think that it is doing excellent work, but the figures themselves on the overall crisis are illustrative. In terms of the productivity in land, in Niger, in 1920, the average yield of cereals per hectare was about 500 kilos. By the late 1950s it was down to 350 kilos. We see reflected in that long-term trend the declining average consumption per person per year in the African subcontinent from about 220 kilos per person in 1970 to only 180 kilos in 1984.
In terms of the effectiveness of the funding of agricultural projects, and especially smaller scale projects, Idriss Jazairy when here recently stressed to several hon. Members that whereas it cost about $400 per tonne to transport emergency food aid to the highlands of Ethiopia, an agency such as IFAD, for example, by spending $200, could produce one tonne of cereals per year for 20 years. It is this kind of project in which the fund should specialise. The overall figures on the sectoral distribution of its lending show that it is still finding it difficult to be able to gain sufficient absorbtion of those resources.
I end by quoting Edovard Saouma, the Director General of the FAO, commenting on the crisis in sub-Saharan Africa. He said:
We can beat this crisis. Stage 1 is food relief. Stage 2 is recovery. But famine could reappear if we do not press ahead with stage 3, a new agenda for Long-term development.
Against such a plea and against such a crisis, the British Government's contribution to the replenishment of the African development fund is profoundly disappointing.

Mr. Colin Moynihan: While I welcome the announcement made by the Minister tonight, it is sad that the fund, which had aimed to achieve a 40 per cent. target—that is, 40 per cent. for agricultural development during the first three years of ADF 3—is lamentably short of that target.
Considering the soft, concessionary loan funds that are available — not least through the IDA and the African and Asian development funds — it is a pity that full advantage has not been taken of this opportunity for specific emphasis to be placed on agricultural and infrastructural development, which does not require the rate of return, for example, which African Development Bank projects require.
Faced with external debts and the poor economic base of many African countries, much weakened by recession, in addition to the appalling famine conditions and the sustained period of drought, with, at the same time, a population explosion and a declining trend in agricultural productivity—all occurring within the last two or three years — it is a shame that we have not had a greater emphasis from the fund towards agricultural development.
It is important that institutions such as the African development fund should look in particular at medium-term strategies to help overcome the appalling problems that are faced by many countries in sub-Saharan Africa as a result of the drought. It would be beneficial for the fund to examine closely a strategy for medium-term solutions, such as smallholder schemes aimed at relieving the dreadful agricultural decline in productivity.
Apart from hoping that the fund accepts that the challenge for Africa is agriculture—and, therefore, the need to move towards the 40 per cent. target and away from the 23 per cent. figure—I hope that consideration will be given to the slow disbursement that has been characteristic of the fund's activities. This is, unfortunately, a growing problem with all international lending agencies. There seems to be a fixation on paying undue attention to the World Bank project cycle, which can sometimes occupy too much time in project preparation and the pre-appraisal of projects before conditions for disbursement are even reached
At a time when disbursement needs to be that much more rapid, I hope that not just the fund but international


lending agencies in general will put more energy into the speed of disbursement. Therefore, while welcoming the conservatism for which the fund is renowned in terms of appraising projects, I hope that that will not lead to too slow a rate of disbursement of funds for projects.
I hope that it will also encourage co-financing, particularly with Gulf funds. There is much money still in the international lending agencies in the Gulf — for example, in the Abu Dhabi and Saudi funds and even in the OPEC fund in Vienna. They all have the facility to co-finance. While, therefore, there exist soft, concessionary, loans in various funds, and not least the African development fund, it is important that co-financing with other international lending agencies should take place.
Equally, I urge British companies which are interested in agricultural development in Africa to recognise that the African development fund looks closely at the financing of infrastructural development within an overall project for agricultural development. Companies do not look closely enough at the opportunities available to them for co-financing and working together through the Asian and African development banks, the international lending agencies and, particularly, by way of soft loan funds, when they are appraising financial packages for their projects and investments.
I have always welcomed our having taken on membership of the fund in 1973 and of the bank in 1983. I hope that we will use our influence to persuade the fund to place more emphasis on agricultural development in Africa and to speed up the disbursement process, for such a speeding up is greatly needed today.

Mr. Jim Lester: I agree with the points made by my hon. Friend the Member for Lewisham, East (Mr. Moynihan), and I wish to add only one. From the Minister's figures, it would appear that the African Development Fund spends 90 per cent. of its money on the poorest countries in Africa—those with an average per-capita income of less than $510—and that its priority is agriculture. As the money spent is substantially more than our bilateral aid programme, one asks whether the African Development Fund could be a vehicle for increased resources, in terms of reaching those who are uppermost in our constituents' minds. Indeed, they believe that our aid should go to support agricultural development in the poorest African countries.
Although I welcome this fourth replenishment, I question the value of the ADF in terms of our total support for Africa, and our commitment to the fund and its development.

Mr. Bowen Wells: I shall confine my remarks to the African Development Fund, which I understand is the subject of the order. The hon. Member for Vauxhall (Mr. Holland) seemed to wish to discuss the International Fund for Agricultural Development and the African Development Bank, which, although worthy of discussion, are not included in the order.
My support for the order is qualified. Insufficient control is exercised by my right hon. Friend's Department over the way in which the African Development Fund

spends its money. My hon. Friend the Member for Lewisham, East (Mr. Moynihan) mentioned the slowness of disbursement, which is especially difficult to understand when one considers the serious needs of African agriculture, and the nature of the fund. It shows a lack of imagination on the part of those who administer the fund. We should have a robust representative on the fund's board of directors to ensure that those concession funds are used in the most appropriate way. I do not believe that Britain is exercising its full influence on the board of directors, and I hope that, since we are giving an additional £13 million to the fund, we shall endeavour to play a full part in the control and direction of the fund so that it achieves its objectives in disbursement and in the direction of disbursement. This applies to the administration of the African Development Bank and the African Development Fund, which have been seriously criticised, not only in Britain and other donor countries but in Africa. I urge my right hon. Friend to ensure that those criticisms are satisfied in the robust manner in which he is tackling other international institutions, such as UNESCO.
As to the direction of the fund, I wish to raise two matters. The first is Shelter Afrique, which is sponsored by the African Development Bank but which I believe should also enjoy some of the fund's money. It could be used to get some housing projects off the ground, to accommodate the people who are congregating round the towns of Africa but who have nowhere suitable to live. They are developing slums faster than ever, and this is exacerbated by the fact that the African population is increasing at such an enormous rate. That means that we must put concession funds into housing and into creating an infrastructure of proper drainage, water supplies and sewage systems. We must provide the basic facilities on which African people can, with the help of concession funds, buy building materials and build substantial, traditional houses. Those are not the same as in many other countries; they are particularly African and therefore appropriate for the sort of money that the fund can provide.
The resources of the fund must be directed to agriculture, but it must be to smallholder agriculture, the development of co-operatives and finding ways in which they can afford proper marketing arrangements and the inputs to make their agriculture more prosperous, not only to produce food for themselves and for the markets and growing urban populations which they serve but for export, so that they can earn the necessary foreign exchange to acquire advice, fertilisers, herbicides and pesticides. That is not happening on a sufficient scale.
The fund should also be used to assist water supplies, and in bringing clean water to villages. The expertise is available in Britain. Pumping from rivers, it is possible to get 98 per cent. of the bacteria out of the water through filtration methods developed in Britain on a very simple basis. The fund should be used for that purpose, but the disbursement of the fund is not sufficiently fast. I do not believe that there has been as much imagination and drive as there could have been in recent years.
In welcoming the order, I hope that the Minister will take charge and give full support, advice and direction to the fund and to the bank.

Mr. Raison: By leave of the House, Mr. Deputy Speaker, may I say that I am grateful for the welcome


given to the order from all parts of the House. No one could dispute that it is right that it should go forward or that the work of the bank is of considerable importance.
The hon. Member for Vauxhall (Mr. Holland) said, possibly a little predictably, that our contribution is too small. I do not think that that is fair. In the last replenishment our contribution was £24·2 million. This time it is nearly £31 million, and that represents an increase in real terms of 13 per cent. That is a fairly respectable level, particularly bearing in mind the pressure on our programme to maintain our bilateral side as well as to provide adequate funds to the main claims on the multilateral side which are before us. In addition, I do not need to remind the House of the substantial contributions that we are making to the development of agriculture, especially in Africa, in all sorts of other ways.
It is also fair to make the point that Denmark, which the hon. Gentleman quoted as having a good record—I do not deny it—has traditionally used the multilateral side particularly strongly as a means of operating its aid policies. Perhaps it is not surprising that in percentage terms Denmark shows up very well.
It seemed to me, as I suggested in my intervention, that the hon. Gentleman was confusing the bank and the fund. No doubt he would deny that, but the plain fact is the fund is related to the poorest countries. There is not much point in talking about what the bank can do in respect of them, because it is lending money and trying to achieve the kind of return that the World Bank achieves. These are countries which cannot borrow on those terms; they are not strong enough to do so. That is why we have the fund and overall it does a good job in that respect.

Mr. Stuart Holland: The Minister made that point before and I made my reply to it. But if we are looking at lending overall, and not least lending to the least developed countries and some of the poorest countries in the world, it is directly relevant to see what the bank is doing. The bank is offsetting the concessional lending that the fund is making.

Mr. Raison: I am not sure that it is worth pursuing the argument, but an essential point is that the bank lends to countries which in this case are not able to afford to repay and would therefore incur debt problems, whereas the whole merit of the fund is that it is a way of conveying resources to the poorest countries. Let us leave it at that.
The hon. Gentleman and my hon. Friend the Member for Lewisham, East (Mr. Moyniham) mentioned agriculture. The fund has allocated 40 per cent. to agriculture cumulatively over the years and 42 per cent. in 1984. Hon. Members on both sides of the House agree about the crucial importance of agriculture and the need

to support it. That is a respectable percentage. It shows that the fund gives agriculture a genuine priority. No doubt that is something that we can continue to discuss in years to come, and we can bring our influence to bear on the bank.
My hon. Friend the Member for Lewisham, East mentioned the slow disbursement of aid. That is a problem not just here, as he said, but in many areas in the totality of aid programmes across the world. There has been some improvement in the rate of disbursement. There was a 24 per cent. ratio of disbursement to commitment at the end of 1981 and by the end of 1984 that had risen to a 30 per cent. ratio. That may not be perfect, but it represents a significant increase.
As I said in my opening remarks, 1984 has been a difficult year, for understandable reasons, but at least matters have been moving in the right direction. We are encouraging all the regional banks to do more co-financing. The African bank attracts official resources, but it has not yet been involved much with the private sector. We should like that, but there are well-known difficulties in Africa for the private sector, but certainly the principle of what my hon. Friend the Member for Lewisham, East said was correct.
My hon. Friend the Member for Hertford and Stortford (Mr. Wells) somewhat qualified his support for the order because of one or two specific points that he made. I have already mentioned control, but we are well represented at the bank and it is in our interest to ensure that it operates as effectively as possible. I undertake that we shall do all that we can to bring that about.
It would perhaps be better if I were to write to my hon. Friend about Shelter Afrique.
I listened to my hon. Friend with considerable interest and sympathy when he talked about the kinds of agriculture that should be supported. He was speaking in very much the same terms as my hon. Friend the Member for Broxtowe (Mr. Lester). It is clearly of paramount importance to try to build up the agriculture of Africa among smallholders, the ordinary peasant farmers and so on. That is not the be all and end all of agriculture, because there are other important aspects, but nevertheless we all feel that that is crucial and fundamental to improving the lot of Africa and lots people. We as an Administration support that, and anything that the bank or fund can do in that direction will have our support.
I thank all hon. Members who contributed to the debate. Once again, I commend the order to the House.

Resolved,
That the draft African Development Fund (Fourth Replenishment) Order, 1985, which was laid before this House on 20th June, be approved.

North Wales (Rail Services)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sainsbury.]

Sir Anthony Meyer: I am grateful to my hon. Friend the Under-Secretary of State for Transport for coming here at this late hour to listen to the debate. I wish to make it plain that I am not setting out to denigrate British Rail. I enjoy travelling with it. The intercity service which I have used for many years has been, on the whole, clean, fast, comfortable, and remarkably punctual. Much of the tourist trade which is so vital to north Wales continues to arrive by rail, as it has for many generations, and in what is now the second consecutive bad year for the tourist industry we desperately need our trains.
In north Wales, there has, however, been a steady—I do not wish to say dramatic — deterioration in service over the years, not so much in speed, comfort and punctuality as in the convenience of the timetable and the facilities available.
I accept that where trains are not full the railway cannot go on running them indefinitely. Services must be cut to reduce losses. The problem with that process is that it feeds on itself. As services are reduced, fewer and fewer people use them and further cuts are required to reduce the loss and so on. However, it is no necessary part of this dismal downward spiral that facilities also be reduced. My first complaint against British Rail—it is the least that I shall voice tonight — is the extreme reluctance and dilatoriness that it has shown in allowing private caterers to take food and drink trolleys on trains on which it no longer operates an acceptable buffet service. Some headway is at last being made thanks to the efforts and persistence of enterprising individuals, among whom my constituent, Mr. Osbiston of Dyserth was one of the first, if not the first, in the area to offer a most attractive trolley service to British Rail travellers in the region.
I shall not renew my plea that decent rolling stock should be allocated to the north Wales line, although that is a sore point in north Wales. The new Sprinter units are coming in slowly, oh so slowly, to replace the bone rattling diesel multiple units in which it is impossible to read, let alone write and still less to drink a cup of coffee. They are being well received and represent a huge improvement. Nor shall I press for the electrification of the Crewe-Holyhead line, although there is a powerful lobby in north Wales arguing for it. I am not at all sure that it would be a justifiable investment, and the effect on the landscape where the train skirts the coastline would be deplorable.
The essence of a railway service is that it should be reasonably predictable. Hold-ups are, or should be, less frequent than on even the best roads, and journey times are shorter — or were when the trains ran direct from London to north Wales. In the past few years, an increasing number of trains have been routed to north Wales via Birmingham, thus adding three quarters of an hour to the journey time. Instead of running direct to and from north Wales, more and more trains now require a change at Crewe. I have no strong objection to either of those things, provided that there is a reasonable connection at Crewe and no excessive wait.
The main burden of my complaint concerns the effect on services to north Wales of the railway works being carried out at Crewe. I fully accept their necessity. I spent one night a few years ago with British Rail being taken round the signal boxes and junctions at Crewe station. All of my colleagues were as shattered as me at the primitiveness and inadequacy of the equipment, which has to handle the hundreds of trains that pass every day through this immensely complicated station layout. It is clear that the work has to be done, and I do not quarrel with the decision to do it all in one go. I have a serious complaint to make, however, about the period chosen—2 June to 21 July. It is just about the busiest holiday period of the year. Had it been possible to start the work two months earlier, the effect on train passengers — north Wales is still heavily dependent on the railway to bring in tourists—would have been much less.
Once the work started, the trains had to be diverted round Crewe, which has clearly resulted in longer journey times. That is a pity, and might lose us some day trippers, but we have to accept it. The real burden of my complaint is that we in north Wales, and a good many others who are served by Crewe and stations beyond it, do not know what we have to accept. A great deal of time and effort is required to find out, and the answer is quite likely to be wrong.
The remodelling of Crewe station started on 2 June, and had been planned several years ahead. On 13 May, and quite independently of the Crewe operation, British Rail introduced new timetables for the area. They are radically different from the old timetables to which travellers to and from north Wales had become accustomed and for which the convenient pocket timetables, which can readily be found in the Travel Office, were available at all stations along the route.
The new timetables are radically different, but as no new pocket timetables have been issued, it is not too easy to find out about trains. Why on earth have they not been issued? How are intending travellers expected to find out the new times of their trains? British Rail has two suggestions to offer. One is that one should buy its complete timetable, price £3, and far too big to go into an already bulging briefcase, let alone the most capacious of pockets. The other is that one should ring up British Rail inquiries and find out. Has anyone at British Rail ever tried doing that from a pay phone box—if one can find one that is not out of order—with no doors?
British Rail admits that the plan to produce pocket timetables "ran into difficulties" — nothing like the difficulties that passengers are now running into without them. But I suppose that BR would now argue that it would not have been much use printing the new timetables because the Crewe remodelling, which began only three weeks after the new timetables came into force, would have made them inapplicable anyway. In desperation I wrote on 12 June to the manager of the midland region in Birmingham and asked him how I could now get to my constituency by rail. So far I have not had so much as an acknowledgement, let alone a substantive reply.
I have managed to procure a document that purports to be a temporary timetable. It is called a "reissued" timetable, whatever that may mean. It gives the timing of the trains to north Wales during this period. It is illegible to the naked eye of anyone over 40. It has now been supplemented by a batch of scarcely more legible leaflets, each one covering a section of the journey. One is entitled


"Crewe-Chester-North Wales". It is the only one that covers the north Wales stations. It also shows the connecting trains to and from London.
According to that timetable, there are only five trains a day from Rhyl to London, whereas until 12 May there were 14, and there are to be 13 when the remodelling at Crewe is finished. According to the timetable, there is no way to reach Chester from Euston before 12.30 pm or Rhyl before 2 pm. The position for the return journey is very slightly better with six trains, including two morning ones.
As a matter of fact, I do not believe that the situation is as bad as that. Travellers have been spotted on Rhyl station at 11 in the morning who claim to have come from London that same morning. It may be that there are morning trains, but it is just not possible to find out and, as I said, the midland region of British Rail does not answer letters.
I do not criticise British Rail for doing the work at Crewe—it had to be done. I could have wished that it had chosen a time of year less vital to our already hard-pressed tourist trade, a period during which, incidentally, anyone hoping to travel from London by coach to north Wales instead of by train will encounter the horrendous problems on the M1 near Hemel Hempstead during the first fortnight of July.
However, I understand that the work at Crewe must produce extensive changes to the schedule and a lengthening of journey times, but why, oh why does not British Rail take the trouble to get proper timetables printed and have intelligible notices put out well in advance at the railway stations concerned? Travelling by rail from London to north Wales at present is more akin to hitchhiking than travel by any scheduled service.

The Parliamentary Under-Secretary of State for Transport (Mr. David Mitchell): I have listened carefully to what my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) has said about British Rail's services to north Wales and how they have been affected by the modernisation works at present being undertaken at Crewe—and the failure to produce pocket timetables in good time before timetable changes take effect. I am sure that any of his constituents who have experienced problems will be grateful to my hon. Friend for raising these matters in the House today.
I should like, first of all, to explain why British Rail has decided to carry out this major work at Crewe, what the work involves and why it has chosen to do it now. First, why carry out the work? As my hon. Friend said the signalling at Crewe—most of which dates back to 1938 —has reached the end of its useful life. Signal failures became more frequent and BR concluded that early action was needed to prevent the old equipment from becoming a serious hindrance to service reliability and ultimately a safety hazard. BR decided that if it had to replace the signalling it would make sense to take the opportunity to modernise the track layout in the station area at the same time. After all, the tracks had been designed to cope with steam operation. They were complex and unwieldy and could not effectively handle the needs of today's modern railway. The opportunity to bring this up to date and simplify it was too good to miss.
When the work is completed, Crewe will be well equipped to handle present-day traffic requirements. Briefly summarised, the work will mean that one new

signal box will replace six old ones; trains will be able to pass through the station at 80 mph instead of 20 to 30 mph, and stopping trains calling at the station will also he able to move more rapidly; the reduction in the number of points and crossovers, from 285 to 110 will mean lower costs and better reliability; new passenger facilities will be incorporated in the station and will include lounges, waiting rooms, buffet, bookstall and toilets with provision for the disabled; two lifts will be installed for use by disabled passengers; certain platforms will be extended to accommodate larger trains; and 47 visual display screens will give passengers full service information.
The end result will be a faster, more efficient and reliable service for BR's customers, who will also have the benefit of a greatly improved station environment at Crewe. BR will have simplified a vastly complex junction, making it cheaper to operate and maintain.
But the old adage "One cannot make an omelette without breaking eggs" applies in this case. The work that BR is undertaking at Crewe cannot be done without some temporary disruption of the normal train services. Having considered the impact that the work would have on its customers, British Rail decided to tackle the programme in three phases. Phase I, which I am glad to say has been completed, consisted of the work that could be done without serious disruption to services. This included the new signal box, signalling renewals, platform alterations, building refurbishment, preliminary track works, overhead line foundations and the removal of the present overhead power lines. Phase II covers the shutdown of Crewe for a seven-week period from 2 June to 21 July, when the new tracks and overhead equipment will be installed. This work cannot be carried out without inflicting serious disruption to services. The third phase, planned for July to October this year, covers work which cannot be carried out until the first two phases are completed, and will involve final adjustments to the overhead line equipment and the new track. Services will not be affected during the third phase.
I know that the aspect which principally concerns my hon. Friend this evening is the virtual shutdown, during a seven-week period, of Crewe station. There is no doubt that BR has taken a radical step in tackling the scheme in this way, but BR believes that by concentrating the phase into a short period, rather than spreading it over weekends — as is the normal procedure for such works — inconvenience to passengers and disruption to normal rail services will be kept to a minimum. If the work were undertaken during weekends, passengers would face delays and diversions at weekends which could last for up to four years. The quicker the work is completed, the sooner passengers will benefit from it.
By concentrating the works, BR is providing its engineers with a more cost-effective and efficient way of handling its permanent way staff and machinery. Machinery is being intensively worked for seven weeks, instead of standing at the trackside for five days out of seven. Engineering staff resources can be concentrated on Crewe for the seven weeks and the engineers can get straight on with the job, instead of having to spend some of each weekend making good for normal running the next day. In all, BR expects to save about £1 million by tackling phase II during this seven week period.
Some people might ask as my hon. Friend has, why, if the work has to be carried out in one tranche, BR is doing it in the summer, when people are travelling and the


inconvenience caused is greater than it might otherwise be. BR had deliberately timed the shutdown to coincide with the time of the year when the weather is, or should be, at its best and daylight at its maximum. Both the spring bank holiday and the main summer holiday period have thus been avoided. I am glad to be able to assure my hon. Friend that phase II is proceeding well, and BR expects to complete it on schedule.
BR has, of course, made alternative arrangements while Crewe station is closed. I am sure that my hon. Friend will understand if I do not give the full details. In summary, inter-city services continue to travel through Crewe with little effect on their scheduled timings and there are a number of special replacement bus and coach services from rail locations to Crewe and special rail shuttle services between Crewe and Chester and Stafford.
As for the north Wales services, to which my hon. Friend has understandably drawn attention, in the present timetable, as in the 1984 timetable, there are six through services each day from London to north Wales and a further nine services each day from London to Crewe enabling connections to be made to north Wales. The only change is that most of the through services are now quicker than they were in 1984.
Under the temporary arrangements during phase II, the six through services remain. In addition, there are four services on which connections can be made to north Wales with one change at Stafford and a further four services involving changes at both Stafford and Crewe. So of the nine daily services enabling connections to be made to north Wales eight are operating during phase II.
In the opposite direction there are six through services, all of which remain during the temporary work, but of the 10 connecting services in the 1985 timetable only six are operating during the phase II work at Crewe, one involving a change at Stafford and five involving changes at Stafford and Crewe. I understand that journey times for passengers travelling on through trains or changing only at Stafford have been increased by about 10 minutes. The worst affected are those making two changes. For the seven weeks of phase II their journeys will take on average an hour longer because BR cannot provide good scheduled connections for people making those changes while all services are temporarily disrupted by the work.
BR recognises that the level of service performance during the first week of the Crewe shutdown was less than satisfactory and I convey BR's apologies to my hon. Friend for that. The temporary arrangements have now bedded down and I understand that the situation is somewhat improved. BR is well aware of the problems that passengers face and the inconvenience caused by the delays. It is constantly striving to improve matters, although we must all recognise that during this period it is impossible completely to maintain acceptable standards of punctuality.
My hon. Friend asked whether it was possible to get to Chester or north Wales in the morning and referred in an amusing aside to someone whom he had seen on the platform. If my hon. Friend is going to his constituency, he can catch the 6.50 am train from Euston arriving at Chester at 10.10, Rhyl at 10.54, Colwyn bay at 11.8 and Holyhead at 12.10. During the phase II work at Crewe the journey will take about 10 minutes longer. If my hon. Friend does not wish to get up quite so early, there are

other connections to Rhyl and Colwyn bay from Euston at 7.50 am and 8.55 am arriving at Rhyl at 11.31 and 12.22 respectively.

Sir Anthony Meyer: I am glad to hear that, but perhaps my hon. Friend will point out to BR that although those trains exist they do not appear in the only timetable covering services to north Wales.

Mr. Mitchell: I am sorry to hear that they are not in the timetable available to my hon. Friend. I have another timetable here which may be of help to him. I take his point about the timetables and I shall deal with that in a moment. I would wish to draw my hon. Friend's points to the attention of British Rail. They are matters for the board, and I understand that my hon. Friend has already put his points direct to British Rail. I have seen a copy of his letter and the reply that has been sent to him. I am sorry that it has not yet reached him, but perhaps he can raise that point with services other than British Rail. I hope that the response will lessen his concern and that he will forgive me if I do not repeat the points that he will find in that letter.
I am, however, entirely at one with my hon. Friend in his concern that new timetables should be made available in good time for travellers to see how any revised timings may affect their trains. I was pleased to see that British Rail produced its main timetable, together with a special supplement giving details of certain services that will alter due to the Crewe modernisation works, on 29 March—six weeks before the new timetable came into operation. I believe that British Rail sent copies of that timetable to all hon. Members in the north Wales area.
The question of pocket, or local, timetables is left to British Rail's regional managers. That is where my hon. Friend identified a particular problem. I understand that the London Midland region, whose rail services are the subject of this debate, did not issue the full range of pocket timetables this year. The main reason was the move earlier this year of London Midland region staff from London to new offices at Birmingham and the fact that many staff involved in timetabling preparations opted not to make the move to Birmingham. British Rail hopes that next year it will be able to produce the full range of pocket timetables.
My hon. Friend also drew attention to the size of print of these timetables. While I was waiting for the early hours of the morning to reach this point, I peered at them. I recognise the difficulty that my hon. Friend raises. I shall also draw that to the attention of the appropriate part of the British Rail organisation.
Although London Midland region did not produce a pocket timetable for the north Wales line, I understand that Gwynedd county council published its own pocket version, which was available to passengers. I am sorry that my hon. Friend did not receive one.
My hon. Friend drew attention to the improvement in catering from private services and asked for more progress. I shall raise this with the chairman of British Rail, whom I hope to see later this week. I recognise, as I am sure my hon. Friend does, that anything that improves the attractiveness of the services provided by British Rail, including the provision of better catering services, helps to attract and hold more passengers. That is to the benefit of the whole of British Rail and those who work for it. Indeed, I recently heard high praise for some of the private trolley operations that have been provided on some of the services in north Wales.
I believe that my hon. Friend has also told British Rail that he has had difficulty in getting responses to telephone inquiries for information about the times of trains. I know that it can be frustrating when the ringing tone seems to last for ever, but British Rail tries to answer most calls within 30 seconds. Most of its telephone inquiry bureaux are already equipped with a call queueing system which stores incoming calls in sequence so that each inquiry is answered in strict rotation. The Llandudno Junction and Chester bureaux already have such systems, but with the present works at Crewe these bureaux are handling considerably more calls than usual. I am sure my hon. Friend will be pleased to know that British Rail is developing proposals to increase the staff and reorganise the office at the Chester bureau. It has also recently installed monitoring equipment at the Llandudno Junction bureau and plans to increase the number of staff on a temporary basis to cover the summer period.
This year's normal timetable shows the same level of Inter-City service on the north Wales line as last year. That is six trains each way a day, and in most cases Journey times are reduced. Southbound trains are nearly half an hour quicker and northbound trains nearly a quarter of an hour quicker. British Rail has also introduced a new through service between north and south Wales. Overall, therefore, the prospects for these north Wales services, once the Crewe modernisation is complete, look rather bright.
I hope that my hon. Friend will take some confidence from that fact. Meanwhile, I have undertaken to draw the points that he has made to the attention of British Rail. I am sure that his constituents will feel that they have been well served by him at this hour of the morning, when he has raised these matters on their behalf.

Question put and agreed to.

Adjourned accordingly at eleven minutes to Two o' clock.